The aggregate surplus of U.K. defined benefit funds covered by the PPF 7800 index increased 1.4% in June to £437 billion ($551.7 billion), the highest aggregate surplus since the index's launch in 2007.
The surplus increased by 56.9% for the year ended June 30, according to a Tuesday update by the Pension Protection Fund, London. The PPF is the lifeboat fund for pension funds of insolvent U.K. companies.
The aggregate funding ratio was 145.8% as of June 30, compared with 145.1% as of May 31. The funding ratio was 122% as of June 30, 2022.
Assets increased by 0.4% for the month and fell 10% for the year to £1.39 trillion. Liabilities declined 0.1% for the month and 24.7% for the year, to £953.3 billion.
Five-to-15-year index-linked gilt yields were down 4 basis points in June and increased by 203 basis points over the year.
The majority of the 5,131 pension funds covered by the index were in surplus as of June 30, at 90.7%, up from 90.5% a month earlier. As of June 30, 2022, 74.3% of pension funds in the index were in surplus.
"The 7800 index registered two records this month — the highest ever aggregate surplus and lowest ever shortfall for schemes in deficit, since the 7800 index was first published in 2007. This has ultimately resulted in a slight improvement in the funding ratio by 0.7 percentage points to 145.8%, a substantial increase on a funding ratio of 122.0% at the end of June 2022," Shalin Bhagwan, chief actuary said in a news release accompanying the update.
"These figures suggest improved funding levels across defined benefit pension funds and were principally driven by returns on equity markets, with U.K. and overseas equities registering month-on-month returns of 1% and 3%, respectively. Higher gilt yields over June also meant a small reduction in liabilities and this was another driver of the improved funding position," he added.