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  2. PENSION FUNDS
January 14, 2020 10:12 AM

PPF 7800 index funding deficit improves in December

Paulina Pielichata
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    The total deficit of U.K. defined benefit funds covered by the Pension Protection Fund's 7800 index decreased to £35.4 billion ($46 billion) at the end of December, from a deficit of £71.1 billion at the end of November.

    The position worsened from a year ago, when the pension funds in the London-based PPF's index recorded a deficit of £31.9 billion as of Dec. 31, 2018, according to a report Tuesday from the PPF.

    The funding ratio of pension plans improved over the month to 98% as of Dec. 31 from 96.1 % as of Nov. 30. The funding ratio was flat over the year, the update said.

    Assets decreased 0.2% during December but rose 10.7% for the year ended Dec. 31, to £1.74 trillion. For the month, liabilities fell 2.2% over the month but increased 10.7% for the year to £1.775 trillion.

    The PPF said in its update that the FTSE All-Share index increased 3.3% for the month and improved 19.2% for the year ended Dec. 31. Five- to 15-year index-linked gilt yields climbed 11 basis points in December but fell 33 basis points over the year.

    As of Dec. 31, 58% of the 5,450 pension funds covered by the index had a deficit, compared with 61% as of Nov. 30. A year ago, 60% of the 5,450 pension funds covered by the index had a deficit.

    “Funding level increase was driven by positive performance from risk assets and rising yields causing liability values to fall by about 2.2%," said Sion Cole, head of BlackRock's U.K. fiduciary business, in an emailed comment. “December’s increase in equity markets brought to a close a strong year for equities globally, with the MSCI World index up by about 24% and the FTSE 100 up 12% over the year.”

    Related Articles
    PPF 7800 index records big deficit jump in August
    PPF 7800 index funding deficit drops in November
    PPF 7800 index deficit improves in October, but worse than a year earlier
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