Rebound in pension fund finances

The PPF says pension schemes were better off a year ago

Final salary pension schemes offered by private employers bounced back into the black in April, said the Pension Protection Fund (PPF).

Its latest index of nearly 7,800 such schemes showed they had a collective surplus of £30.3bn.

That compared with a deficit of £23.6bn at the end of March.

This was the first surplus reported this year, with the improvement due to higher share prices and also to higher yields on government bonds.

"During the month of April 2008, there was a 3.9% increase in assets due to improving equity markets," said the PPF.

"However, higher gilt yields led to a fall in liabilities of approximately 3.4%," it added.

Deficit

Pension scheme finances have now improved for two months in a row, after declining steadily since the middle of last year under the impact of falling share prices.

Despite this recent improvement, schemes are not as financially healthy as they were a year ago when, at the end of April 2007, their collective surplus stood at £88.3bn.

Since then, the number of schemes in surplus has fallen from 3,225 to 2,473 while the number of schemes in deficit has risen from 4,519 to 5,271.

Thus 68% of all final salary schemes surveyed by the PPF are in deficit.

"Over the past year, the negative impact of equities on scheme assets - the FTSE All Share Index fell by 7.6% - combined with falling bond yields have led to an overall worsening of the funding position," the PPF said.