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The Actuary The magazine of the Institute & Faculty of Actuaries

Change of assumptions prompts plunge in PPF 7800 surplus

A change of assumptions used by the Pension Protection Fund (PPF) to measure defined benefit schemes in its 7800 Index contributed to a £43.2bn month-on-month fall from a surplus of £45.5bn in March to just £2.3bn in April.

On 14 April, the Pension Protection Fund updated its valuation assumption guidance for both s179 and s143 valuations with the effect of reducing the effective yields used to discount future payments by 0.2 per cent a year for compensation in payment, and increasing the assumption about future longevity improvements for males.

The 7800 Index also showed that the funding ratio dropped from 104.8% to 100.2%.

The PPF said that just over 80% of the month-on-month fall was due to the change in assumptions. Without this factor there would have been an aggregate surplus of £37.2bn and a funding ratio of 103.9%.

The total assets of monitored schemes stood at £1003.3bn and total liabilities were £1001.0bn. There were 4,139 schemes in deficit and 2,394 schemes in surplus.