Purple Book shows continuing trend towards bonds

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The Purple Book 2019, published today by the Pension Protection Fund, shows that long-term trends around derisking are continuing.

The aggregate proportion of schemes’ assets invested in equities fell from 27.0 per cent to 24.0 per cent, while the proportion in bonds rose from 59.0 per cent to 62.8 per cent.

The report also shows that index-linked bonds form the bulk of DB schemes' bond portfolios at 46.2 per cent. Corporate bonds accounted for 28.4 per cent of the bonds held and government fixed interest bonds contributed 25.4 per cent.

Schemes' holdings of UK-listed shares fell, from 18.6 per cent to 16.6 per cent, while overseas-quoted and unquoted/private equities both increased slightly to 69.7 per cent and 13.7 per cent respectively.

The book also shows the combined deficit of schemes in deficit is now £160bn, down from £188bn, while the surplus of those who have one was £30bn more than a year earlier, at £147bn.

The PPF’s funding ratio, according to its own measures, fell from 122.8 per cent as at 31 March 2018 to 118.6 per cent as at 31 March 2019, mainly because of a large claim from the Kodak Pension Plan No. 2.

In terms of membership size, micro schemes still have the best aggregate funding level despite a reduction since last year. They are  followed by the very largest schemes, while those with 100 to 4,999 members were the least well funded.

Source: Pension Protection Fund, Purple Book 2019

 
There were £37bn worth of risk transfer deals in the year to June 2019, up from £22bn. The PPF notes that "this is still a relatively small amount in the context of the whole universe of schemes".

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