UK pension deficit up by £60bn during March according to PwC’s Skyval Index

Apr 01, 2019

New figures released today from PwC’s Skyval Index show the deficit of defined benefit (DB) pension funds stood at £260bn at the end of March 2019 - an increase of £60bn from the previous month end.

PwC’s Skyval Index, based on the Skyval platform used by pension funds, provides an aggregate health check of the UK’s c.5,450 corporate DB pension funds.  The current Skyval Index figures, based on the 'gilts plus' method widely used by scheme actuaries, are:

Assets

Liability target       

Deficit

£1,650bn      

£1,910bn

£260bn

Steven Dicker, PwC’s chief actuary, said:  

“A sign of continuing economic uncertainty, the real yields on UK inflation linked government bonds have reached an all time low.  This makes the challenge of achieving real returns to support inflation linked pension benefits even more difficult, contributing to this month’s significantly increased deficit.  

“The search continues for assets which can meet inflation linked benefit outgo but which yield higher than UK inflation linked government bonds.  Once implemented, these strategies help stabilise funding levels as the assets and liabilities move in parallel with market movements.

“Suitable assets are, however, in limited supply in ways pension schemes can invest in them.  Action is needed, for example, to make much needed infrastructure investment opportunities more accessible to pension schemes.”

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