DB funding levels buoyed by asset growth

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Defined benefit schemes have on average increased their funding level, the Pensions Regulator's 2021 scheme funding analysis shows, with 31% of schemes now in surplus. Deficits show a median reduction of 31%, bringing the median funding level to 92.6%.

By the end of January 2021, TPR had received over 1,660 valuations with a valuation date in 2018/19. Almost a third (31%) of schemes reported a surplus on a technical provisions funding basis.

Median scheme assets grew by 18% over the period since schemes' last valuation, while technical provisions grew at a lower rate, by 12%. The median relative change in deficits for all schemes is -31%.

TPR said schemes' improved asset position may have been due to the combined impact of sponsor contributions and positive overall gains on investments in the three years to valuation pushing up assets.
Source: TPR

Average annual deficit reduction contributions increased by 8% at the median, while the median extension to the recovery plan end date is one year. The average recovery plan length is now at 5.9 years, with the median at 5 years.