The total deficit of U.K. defined benefit funds covered by the Pension Protection Fund's 7800 index rose to £162.9 billion ($200.7 billion) at the end of August, from a deficit of £90.7 billion at the end of July, an update Tuesday from the PPF said.
The position worsened from a year ago, when the pension funds in the London-based PPF index recorded a deficit of £29.5 billion as of Aug. 31, 2018.
The funding level of pension plans also worsened over the month to 91.5% as of Aug. 31, from 95% as of July 31. As of Aug. 31, 2018, the funding level was 98.2%, the update said.
Assets rose over the month and the year by 1.5% and 8%, respectively, to £1.76 trillion. For the month, liabilities increased 5.4% and 16% for the year to £1.92 trillion.
The PPF said in its update that the FTSE All-Share index fell 3.6% for the month but improved 0.4% for the year. Five- to 15-year index-linked gilt yields fell 22 basis points in August and fell 113 basis points over the year.
As of Aug. 31, 67% of the 5,450 pension funds covered by the index had a deficit, compared with 62% as of July 31. A year ago, 59% of the 5,450 pension funds covered by the index had a deficit.
"The main driver of the falls was a sharp decline in gilt yields, which fell 30 basis points across the curve," said Sion Cole, head of BlackRock's U.K. fiduciary business, in a comment on the update. "While schemes with liability hedging and credit strategies in place will have been protected, equity volatility increased dramatically so assets fell over the month."
