The UK’s largest 200 pension funds moved into a £3bn surplus at the end of October – helped by rising inflation.
Despite the Bank of England keeping consumer prices inflation below 2%, most pension schemes invest in assets that grow with the retail price index – which was almost 4% over the last year.
This inflation increased the value of pension scheme assets more than it increased their liabilities, according to pension specialist Aon Consulting.
Half of the top 200 pension funds are now in surplus, with the expected cost of UK final salary pension scheme benefits down by around £10bn in 12 months, according to Aon.
Marcus Hurd, senior consultant and actuary at Aon Consulting, said: “The environment of higher inflation is easing the burden on UK pension schemes, because many schemes benefit from inflation-related investment returns while paying out benefits that are not fully linked to inflation.”