50% hedged scheme nears full funding says Broadstone’s Sirius Index

The Broadstone Sirius Index – a monitor of how various pension scheme strategies are performing on their journeys to self-sufficiency – posts its latest update. 

The Broadstone Sirius Index finds that the 50% hedged scheme is nearing full funding amid continued improvements to its funding position through May, recording a high of 99.7% near the end of May as it approaches full funding. 

On a month-to-month basis, the scheme posted notable gains, rising from 98.3% to 99.0% as a slight reduction in yields saw liabilities and hedging assets rise. 

The fully hedged scheme also saw funding improvements, rising from 67.5% to 68.2%. 

Chris Rice, Head of Trustee Services at Broadstone, commented: “Both of our example schemes improved their funding positions in May following a reduction in yields which drove liabilities and assets higher.’ 

“It is also encouraging to note that both schemes’ funding levels have remained relatively stable for over a year now, and we would expect that the majority of defined benefit schemes have adapted to their new funding positions and adjusted their long-term investment and funding strategies accordingly. 

“As we enter the General Election period, it looks likely that the next government will inherit a stable defined benefit pension scheme funding environment,” he said. “This will help it consider and develop long-term policy regarding well-funded schemes that are 

targeting buy-out in a hot insurance market, the emerging consolidation options and/or run on as well as those schemes where there is still work to do. 

“This will allow trustees to work with employers to set realistic and affordable medium to long-term strategies.”