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DB pension scheme funding continues to rise in UK

According to PwC’s Pension Funding Index, asset values increased during April while liability values fell slightly

Defined benefit (DB) pension scheme funding in the UK is continuing to improve, according to PwC’s Pension Funding Index.

Asset values in the country increased over the month of April, while liability values fell slightly during the period.

PwC’s index revealed the UK’s overall DB pension scheme surplus currently stands at around £210bn.

Raj Mody, partner and global head of pensions at PwC, said: “I expect shareholders of companies – whether listed or private – with defined benefit schemes will want to look closely at how they are managing their pension plans, now that funding positions have improved.

“For example, many pension plans have substantial investments in index-linked gilts and other assets which are delivering negative real returns. This doesn’t seem an efficient way of delivering their pension commitments.”

He added: “Trustees of pension schemes, and their advisers, have become conditioned to looking at their funding and investment strategy with reference to gilt yields.

“It’s impossible to make sense of that without also looking at the situation in real terms, after allowing for inflation requirements in their pension scheme benefits.”

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