The aggregate surplus of U.K. defined benefit funds covered by the PPF 7800 index decreased slightly in November, by 2% to £371.5 billion ($445.3 billion), as increased liabilities outpaced gains in assets.
For the year, the surplus more than tripled, from £81.4 billion as of Nov. 30, 2021, a PPF update said.
Assets grew by 2.9% for the month and 20.1% for the year ended Nov. 30 to £1.47 trillion, and leading to a funding ratio of 133.7%. Liabilities, however, grew 4.6% vs. figures as of Oct. 31, to £1.1 trillion. The funding ratio was 136% as of Oct. 31.
For the year, liabilities fell 37.5%, and the funding ratio increased from 104.6% as of Nov. 30, 2021.
The majority of the 5,131 pension funds covered by the index remained in surplus as of Nov. 30, with 85.5% in surplus, down slightly from 86.2% as of Oct. 31. As of Nov. 31, 2021, when the index covered 5,215 pension funds, 53.9% were in surplus.
The increase in liabilities and assets was mostly driven by falling bond yields, Lisa McCrory, chief finance officer and chief actuary at the PPF, said in a statement accompanying the update. Five-to-15-year index-linked gilt yields fell 19 basis points in November, but increased by 301 basis points over the year.
"The main drivers were the UK Government's Autumn Statement and a tweak to the outlook for monetary policy with central banks now expected to slow the pace of rate hikes in the coming months. While bond yields fell during November, they remain well above the levels that the started the year. This is reflected in the fact that the bounce-back in assets and liabilities in November is small relative to the falls over previous months," Ms. McCrory added.