Pension funding improves as gilt yields hit 2023 highs

Aggregate funding level of UK DB schemes on a long-term basis increases to 105% in February

Jonathan Stapleton
clock • 1 min read
Pension funding improves as gilt yields hit 2023 highs

The aggregate funding level of UK pension schemes increased over February to 105%, analysis from XPS Pensions Group shows.

The consultancy said a rise in gilt yields of 0.39 percentage points, to the highest levels seen since October's market turmoil, led to a decrease in the value of liabilities, improving the funding level of schemes.

XPS Pensions Group's DB:UK funding tracker showed that, during February 2023, UK pension schemes' funding positions have risen by around £30bn against long-term funding targets.

Based on assets of £1,447bn and liabilities of £1,377bn, it said the aggregate funding level of UK pension schemes on a long-term target basis was 105% as of 27 February 2023.

XPS said that during February the FTSE 100 hit a record high of over 8,000 points amid positive company earnings, a weakening pound and hope that both inflation and interest rates may be nearing their peak.

It said that, in this environment and with funding levels strengthening, schemes could begin to focus more attention on their long-term investment strategies.

XPS Pensions Group senior investment consultant Felix Currell said: "It's been an encouraging start to the year for UK pension schemes which have benefited from the positive performance of global equity markets and rising gilt yields leading to an increase in funding levels.

"Despite the hope that central banks may be coming to the end of a period of aggressive rate hikes, there remains risks to the outlook of the global economy. Trustees will be hoping that if yields do continue to rise that growth markets do not splutter."

XPS DB:UK tracks the funding position of UK DB pension schemes on a long-term target basis.

Read more

Professional Pensions' DB Funding Index

More on Defined Benefit

Partner Insight: What we share sets us apart

Partner Insight: What we share sets us apart

Rosie Fantom, Head of Pension Risk Transfer, explains how BPA Plus combines guaranteed security with the potential to share more value.

Rosie Fantom, Head of Pension Risk Transfer @ M&G
clock 28 October 2026 • 4 min read
Tender Watch: People's Pension reappoints Northern Trust

Tender Watch: People's Pension reappoints Northern Trust

Firm will continue to provide scheme with fund admin and performance measurement services

Professional Pensions
clock 26 October 2026 • 1 min read
'Value horizon' in run-on could increase member outcomes by up to 15%

'Value horizon' in run-on could increase member outcomes by up to 15%

Hymans report says investment strategy is key to achieving scheme objectives in run-on

Alex Levy
clock 22 October 2026 • 1 min read
Trustpilot