The total surplus of corporate pension funds covered by the PPF 7800 index increased by 0.6% in December to £428.2 billion ($545.1 billion), despite a fall in the funding ratio.
The funding ratio as of Dec. 31 was 142.8% , compared with 145.7% as of Nov. 30. The surplus grew by 13.7% over the year, while the funding ratio increased from 136.5%, the Pension Protection Fund, London, said in its monthly update.
Assets grew by 5.3% over the month to £1.43 trillion but were offset by a 7.4% increase in liabilities to £1 trillion. For the year, assets increased by 1.3%, while liabilities fell by 3.2%.
"The fall in government bond yields caused the value of both hedging assets and liabilities to rise," said Shalin Bhagwan, chief actuary and interim chief financial officer at the PPF, in the update. "The rise in scheme asset values wasn't enough to keep pace with the rise in liability values, meaning that funding ratios saw a small deterioration. This once again highlights the increased risk to aggregate funding levels from persistently higher volatility in interest rate markets."
