UK defined benefit (DB) pension scheme funding levels recovered in April after falls during March, according to Broadstone’s Sirius Index.

However, Broadstone warned of continued volatility and an uncertain macroeconomic outlook.

The Sirius Index tracks pension scheme strategies on their path to low dependency, comparing the performance of growth-focused and matching-focused investment approaches against a low dependency benchmark.

The index found that both schemes reversed the falls in March to about the same level or better than the start of the year. Both schemes started 90 per cent funded at the start of 2026.

By the end of April, the growth-focused scheme saw its funding level improve to 91.7 per cent, up from 89 per cent at the end of March, exceeding the position at the start of the year.

Broadstone attributed this improvement to a positive performance in growth assets and higher interest rates, due to not being fully hedged.

The matching-focused scheme experienced less of an improvement but still ended April with a funding level of 89.7 per cent, up from 88.6 per cent the previous month.

Commenting on the latest monthly index, Broadstone investment director, Andrew Knight-Stephens, explained that pension schemes with lower levels of interest rate hedging generally saw an improvement in funding levels over April, as higher gilt yields reduced the value of scheme liabilities.

He continued: “However, whilst retaining interest rate exposure was rewarded over April, such a position continues to represent a source of funding level risk.

“Growth assets, particularly equities, delivered positive returns over April, with most major equity markets advancing despite continued volatility and an uncertain macroeconomic backdrop.”

The Broadstone Sirius Index launched in October 2022 to better understand the progress of modelled schemes on their journey to low dependency.

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

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