Private pensions back in the black

PRIVATE pension schemes in the UK have motored back into surplus, driven upwards by healthy stock markets. say the new monthly figures out from the Pension Protection Fund (PPF), the body that insures pension schemes.

The aggregate balance of the 6,653 schemes in the pension protection fund’s PPF 7800 index is estimated to have improved over the month to a surplus of £13.5bn at the end of October 2010, a sharp jump upwards from a deficit of £20.4bn at the end of September.

Total assets of private pension schemes were £967.1bn as of 31 October, slightly outstripping total liabilities of £953.6bn. The position has improved dramatically from the figure that was announced 12 months earlier on 31 October 2009 when the deficit was £44bn.

Total scheme assets increased 0.6 per cent over the month and 11.8 per cent over the year. Total liabilities were 2.9 per cent down over the month and 4.9 per cent over the year.

The balances of pension schemes tend to be volatile and are strongly influenced by gilt yields and major asset classes, especially equity markets. Much of the movement in the figures can be attributed to the performance of the FTSE All-Share, which rose by 13.6 per cent In the 12 months to October 2010 while 15-year gilt yields were down by 28 basis points.

At the end of October 2010 62 per cent of the 6,653 defined benefit schemes were in deficit, a figure that is well down from 4,632 at the end of October 2009. Around 500 more schemes are in surplus than at the end of October 2009.