Quarterly figures from the Office for National Statistics (ONS) published today show that despite the huge market turmoil of the second half of 2022, the market value of private sector DB schemes fell by just 3% between Q3 and Q4, from £1.269 trillion to £1.230 trillion. And the overall picture on DB scheme health remains remarkably robust on a range of indicators, including data from regulators and the Pension Protection Fund (PPF).
On the PPF measure, the combined surplus of DB schemes now stands at a record £430 billion, compared with deficits of over £400 billion just 7 years ago. Meanwhile, according to the Pensions Regulator (TPR), three quarters of all DB schemes are in surplus measured against the prudent ‘technical provisions’ benchmark used by the Regulator. In addition, LCP analysis of the company accounts of the FTSE 100 shows a combined surplus in the latest accounts of around £70 billion, up £10 billion on a year earlier.
LCP’s most recent analysis, based on a large sample of schemes where it works as scheme actuary or provides advice, and including some of the largest schemes in the country, finds that around three quarters of schemes are now in a better funding position than they were a year ago.
Taken together, these figures show a DB sector better funded than it has been for decades, despite the ups and downs of 2022.
Commenting, Steve Webb, partner at LCP said:
“DB pension schemes have emerged from the turmoil of the last 12 months in remarkably good shape. The latest ONS figures show only a very modest fall in the value of schemes between Q3 and Q4 last year, which can be set against the huge improvements in scheme funding which we have seen in recent years. This shows the robustness of DB pensions and their underlying financial management, which is particularly remarkable given the turmoil all around”.
