Pension schemes see fall in deficits

The shortfall in the funds held by the UK's final salary pension schemes has declined significantly.

Figures from the Pension Protection Fund (PPF) revealed that the overall deficit for the 7,400 schemes at the end of February stood at £15.1 billion.

This compares with a shortfall of £51.9 billion recorded at the end of January. A year ago, the deficit was £204.7 billion.

The improvement was driven by healthier yields on shares and gilts. Better returns on government bonds also helped to reduce the cost of paying for final salary pension schemes by 2 per cent.

The PPF said: "During the month of February there was a 2.5 per cent increase in assets due to rising UK and global equities."

The rise in the value of defined benefit schemes saw a corresponding drop in the numbers of individual schemes that were in deficit.

In January, 5,528 schemes had shortfalls; in February, that figure was down to 5,191. Schemes with surplus funds climbed to 2,171 last month, compared with 1,841 in January.

Combined, the assets of all defined benefit pension schemes were up to £881 billion, a rise of 2.5 per cent on the month and 21.8 per cent on the year.