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The Actuary The magazine of the Institute & Faculty of Actuaries

DB pension deficits soar as 80% of schemes reveal funding void

The PPF 7800 index, which tracks all schemes paying a PPF levy, reveals the aggregate deficit of 6,533 schemes tracked by the PPF increased to £196.4bn at the end of September, up from £117.5bn last month.

It now means just 18.1% of DB schemes are in surplus, reflecting a year on year fall from 2,062 schemes in surplus at the end of September 2010 to 1,188 in surplus today.

The number of schemes in deficit at the end of September increased to 5,345, which represents 81.8% of all the DB schemes in the PPF universe.

The PPF said falling equity markets had reduced asset values while plunging gilt yields had raised liabilities for schemes.

Total asset values for all the schemes dropped 1.1% during the month from £974.2bn to £963.8bn while total liabilities increased 6.3% from £1091.6bn to £1160.2bn.

This reflected a 6.1% drop in the FTSE All-Share Index over September and a 53 basis point fall 15-year gilt yields.

The 7800 Index showed aggregate funding ratios for scheme also fell from 89.2% to 83.1% at the end of September 2011.

The PPF monitors all schemes paying a levy to the lifeboat fund to gauge the risks it is exposed to.

Source: Professional Pensions