The combined deficit of the UK's defined benefit (DB) pension schemes fell 15% to £105bn on an accounting basis during February, JLT Employee Benefits analysis reveals.
At the end of the month, the consultancy's monthly index said private sector DB assets totalled £1.5trn, while liabilities were at £1.6trn, resulting in an overall funding level of 93.6%.
The deficit is down £19bn since January, while the funding level has improved by one percentage point.
A similar story played out for FTSE 100 schemes, whose aggregate deficit fell £11bn over the month to £24bn, with a funding level improvement of 1.4 percentage points to 96.5%.
These improvements were despite the equity market volatility at the beginning of the month, when the FTSE 100 dropped 7% between 29 January and 6 February in a price correction.
However, JLT Employee Benefits director Charles Cowling said while the consultancy's index showed a positive picture, many companies are still struggling with their DB liabilities.
He explained: "Once again, markets have been reasonably benign for pension schemes this month and overall reported pension deficits have continued to drift downwards," he said. "However, this positive pictures masks ongoing challenges for a number of companies with large pension schemes, evidenced this week by news that the Toys R Us pension scheme will soon be following Carillion's scheme into the Pension Protection Fund."
Cowling noted that a core reason for this was the IAS 19 measure was not one used for determining the cash payable by the employer to the scheme, with actuarial valuations showing a need for this to increase.
However, with recent high-profile scrutiny of company dividend payments, plus The Pensions Regulator's (TPR's) pledge to investigate where it believes dividend to deficit recovery contribution ratios are too high, Cowling predicted a harder line from the watchdog.
"We expect TPR to take a tougher stance on companies prioritising dividends to shareholders over contributions to pension schemes in its 2018 annual funding statement," he continued.
The watchdog last week revealed it was seeking greater section 231 contribution-setting powers in the upcoming DB white paper.
JLT's index paints a continuingly positive picture for DB funding levels, which has been mirrored by other indices using different measures. Last month, the PPF said the schemes in its 7800 Index has reached their highest funding level since 2014 at 96.9% on the s179 basis on 31 January.
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Pensions schemes are better funded now than this time last year, according to PwC’s annual Pension Scheme Funding Survey.