UK pension deficit climbs £40bn in November, according to PwC’s Skyval Index

Dec 01, 2017

New figures released today from PwC’s Skyval Index show the deficit of defined benefit (DB) pension funds rose by £40bn to £450bn at the end of November 2017.


PwC’s Skyval Index, based on the Skyval platform used by pension funds, provides an aggregate health check of the UK’s c.5,800 DB pension funds.  The current Skyval Index figures, based on the 'gilts plus' method widely used by scheme actuaries, are:

  Assets Liability Target Deficit Deficit change since last month
Funding measure (current) £1,560bn £2,010bn £450bn (£40bn)

Steven Dicker, PwC’s chief actuary, said:


"Despite the increase in short-term interest rates by the Bank of England, long-term real interest rates, which are the main driver of the pension deficit number, moved slightly in the opposite direction. This resulted in a £60bn increase to liabilities over the month with assets growing modestly at £20bn, resulting in a net £40bn increase in deficit.


"The economic drivers of long-term interest rates are complex and they are further impacted by supply and demand factors including quantitative easing, which leads to month to month swings in the deficit calculation using the ‘gilts plus’ approach."



Notes to editors

  • Steven Dicker, PwC’s chief actuary,  is available for interview - please contact Katherine Howbrook on 020 7212 2711/07595 609 737 or or Felix Ampofo on 020 7213 3646/07841 468 245 or

Notes on deficit measures:

  • Funding measure: the target used by pension fund trustees to determine company cash contributions, calculated on a bespoke basis for each pension fund, agreed between the trustees and sponsor.


  • Figures provided have been estimated by PwC and Skyval based on publicly available data of UK defined benefit pension funds, including from the Pensions Protection Fund’s dataset.


  • Other pension deficit measures exist but are generally not meaningful for tracking the health of UK pension funds.  For example:


  • Accounting: the target value of liabilities shown in company accounts, based on formal accounting standards (such as IAS19) which typically assume asset returns in line with AA-rated corporate bond yields. Pension decision-makers should not rely on the accounting measure to inform their management decisions.  Accounting numbers are not designed to be tailored to individual pension fund circumstances.  Some commentators publish IAS19 tracking figures but they are not in isolation a good basis for understanding pension funding status, nor deciding the best future strategy for any given pension fund's assets and liabilities.


  • Buy-out: the value an insurer would typically place on the fund's liabilities, which depends on prevailing market terms for these kinds of transactions. It is a hypothetical scenario for all pension funds to buy out their total liabilities in one go, as there is not enough capital market capacity to support this. Some commentators cite the theoretical deficit on such a buy-out basis as in the region of £1trn, but, in practice, this is not a cost which could or would ever be incurred in this way.




About Skyval

Skyval is a pensions platform which trustees, sponsors and all advisers can use for their pension scheme, as a single and confidential tool for their scheme-specific funding, investment, analytics and benchmarking requirements.


The Skyval suite of modules includes Skyval Dashboard, Skyval Monitor, Skyval Choice, Skyval Optimiser, Skyval Accounting and Skyval Insure. Skyval helps pension schemes reduce costs, manage risks and make better decisions faster. Visit, follow @SkyvalOnline or connect on LinkedIn

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Katherine Howbrook
Senior Manager, media relations, PwC United Kingdom
Tel: +44 (0) 7595 609 737

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