UK defined benefit (DB) pension schemes funding levels remained stable in Q1 2024, as the opening quarter for the year continued many of the same trends seen in 2023, analysis from Broadstone has revealed.

Broadstone’s Sirius Index, which monitors how various pension scheme strategies are performing on their journey to self-sufficiency, showed that the fully hedged scheme lost some ground in the opening quarter of the year, as its funding position dropped from 68.9 per cent to 68.2 per cent.

In contrast, the half-hedged scheme’s funding level registered a marginal increase, rising six percentage points from 96.1 per cent to 96.7 per cent between December 31 2023 and March 31 2024.

Broadstone head of trustee services, Chris Rice, explained that the opening quarter for 2024 continued many of the same trends seen in 2023, with stability in the market sustaining "vastly-improved" pension scheme funding levels.

And the stable and improved funding environment for pension schemes is driving record demand within the insurance market, as Rice pointed out that the insurance market remains "hot", with bulk annuity transaction volumes expected to set yet another record.

“Thankfully, insurers are scaling up to meet this demand and an increasing array of choices is on the horizon,” he continued.

Indeed, Rice said that, for schemes feeling left behind in the de-risking market, perhaps due to the complexity of benefits, readiness to buyout, premium size or funding levels, there are increasingly more options to consider.

“As well as existing insurers scaling up, we have seen new entrants in the de-risking market with rumours of more to come, the first two commercial superfund deals have been completed while the government is consulting on the establishment of a new Pension Protection Fund (PPF)-run public sector consolidator,” he continued.

“Trustees can also now explore the potential for running on as a viable alternative to buyout by reaching low dependence on the employer’s support, especially as the regulator explores the ability of freeing up surpluses.”

This article was first published on our sister website, Pensions Age.

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