The accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies moved to a surplus over the course of June, new data published by Mercer has revealed.

Mercer’s latest Pensions Risk Survey confirmed that this figure stood at a total surplus of £11bn as of 30 June. This follows a £41bn fall which Mercer reported at the end of May, that had left the deficit standing at £4bn.

Liabilities fell from £716bn at the end of May to £667bn at the end of June, which Mercer stated was driven by further rises in corporate bond yields as well as a small fall in the market’s view of future inflation

This more than offset the fact that asset values also fell, to £678bn, compared to £712bn at the end of May.

“For the first time in over three years, the month-end aggregate funding position on an accounting basis is expected to be showing a surplus, and yet again the main driver was bond yields,” Mercer UK wealth trustee leader, Tess Page, said.

“Employers and Trustees will be looking to control risk, and funding improvements offer a fantastic opportunity to bank these gains. We expect that schemes will be exploring the right actions for their circumstances - ranging from a simple change in investment strategy to securing benefits with an insurance company. Those schemes with clear journey plans will be best-placed to act quickly.”

Figures used for the monthly Pensions Risk Survey from Mercer relate to approximately 50% of all UK pension scheme liabilities, with analysis focused on pension deficits calculated using the same approach that firms adopt for their corporate accounts. The data underlying Mercer’s survey is refreshed as companies report their year-end accounts.

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