PPF releases deficit figures for September, buoyed by bond yields heading back north

Aggregate deficits faced by the government's pension lifeboat edged down in September, finally levelling off after a summer that has seen an astronomic rise in shortfalls.

The Pension Protection Fund (PPF), which employers pay into via a levy and effectively underwrites the defined benefit pension liabilities of Britain's companies, said that its aggregate deficit stood at £420bn at the end of September. This was down from £460bn at the end of August.

The PPF represents 5,945 UK schemes with the vast majority, 4,993, in deficit. The aggregate liability of the schemes totalled £1,869.3bn with associated assets of £1,449.5bn.

Blackrock's head of UK strategic clients, Andy Tunningley said that while the latest data meant that a "faint pulse" had been found, "UK pension funds remain in urgent need of life support".

Pension liabilities are valued with referenced to bond yields. Britain's Brexit vote and the Bank of England's interest rate cut led to record low yields – a lower yield drives up pension scheme liabilities.

Tunningley explained that changes in bond yields were a key factor in stemming the spiralling deficits and had themselves been influenced by a sell-off of bonds by pension funds.

"A sell-off in UK government bonds, causing yields to rise and liability values to fall, was linked to an announcement at the end of the month that a UK parliamentary committee is to investigate proposals allowing UK private sector pension schemes to temporarily amend or suspend inflation-linked pension increases," he said.