Shalin Bhagwan: DB scheme funding remains stable
The aggregate surplus of the 4,838 schemes in the Pension Protection Fund (PPF) 7800 Index rose by £2.7bn to £257.6bn in November.
The PPF index – which estimates scheme funding positions on a section 179 basis – showed that, while aggregate defined benefit (DB) assets had fallen by 0.2% from £1,119.9bn to £1,118.0bn during the month, aggregate liabilities had fallen more, dropping by 0.5% from £865.0bn to £860.4bn.
The latest figures follow the publication of The Purple Book 2025 last week and an update to the PPF7800 index – including retrospectively from March 2025 – to reflect the latest data.
PPF chief actuary Shalin Bhagwan said: "Each December, after releasing The Purple Book, we update the 7800 Index. This ensures that our dataset is more up-to-date and provides a clearer picture of the schemes we protect, helping us better understand the risks we face. This means the figures quoted for last month (as at 31 October 2025) have been restated to reflect the new data we have access to.
"This month's 7800, using the latest data, paints a picture of stability in the estimated funding of the eligible universe of DB schemes, with gilt yields largely unchanged at the month-end and equity markets fairly flat throughout November. The s179 funding ratio inched up by 0.4 percentage points, as estimated liability values fell slightly more than estimated scheme assets values, while the aggregate s179 funding position improved by £2.7bn to a £257.6bn surplus."
Source: PPF
The publication of the latest PPF 7800 data also follows the government's Autumn Budget and the announcement of legislation to allow the PPF to index pre-1997 benefit accruals, where a member's original schemes provided this benefit. The government said this would come into effect from January 2027.
The PPF said work was underway to enhance the PPF 7800 index to approximately quantify this change – a move it said would be implemented in the coming months.
For now, it said the figures in the PPF 7800 made no allowance for indexation on pre-97 pension – but noted the Purple Book 2025 estimated that the move could increase section 179 liabilities by just under 12% using 31 March 2025 numbers.
The PPF added, however, it was "important to note that legislation on this issue was still subject to Parliamentary scrutiny – adding the actual impact would depend on final legislation and regulations that are brought into force.
Reaction
Broadstone actuarial director Sarah Elwine said the PPF's update to its methodology had resulted in a small boost to the funding ratio, reflecting a healthier than previously anticipated picture of DB scheme funding.
However, she noted it had yet to account for the government's announced changes to pre-1997 indexation in the Budget – but said this move was "unlikely" to impact funding or route to buyout for most schemes.
She said: "Looking forward to 2026, pension schemes remain extremely well-funded by historical comparisons and trustees will be in a strong position to consider their route to endgame. The de-risking market looks set for a highly active 2026 with an increasing number of options available to schemes to achieve their long-term strategic objectives."
Gallagher managing director of UK wealth consulting Vishal Makkar added: "Despite the volatility in gilts and the broader market ahead of the Autumn Budget, the latest PPF 7800 Index shows an encouraging uplift in aggregate funding.
"The surplus has risen to £257.6bn, keeping with the pattern of resilience that we saw over the past few months. While speculation on the country's fiscal outlook in the run up to the Budget did trigger a few noticeable movements in gilt yields, the UK's DB schemes weathered some choppy waters without showing a single sign of strain."
He added: "This resilience will ensure confidence levels remain high into the New Year. The Pension Schemes Bill has now entered the report stage and will soon begin its third reading. Against an ever-changing backdrop, trustees must remain alert to the policy updates and ensure their strategies can flex to meet new regulatory demands while still seizing new growth opportunities."
