Insight & Analysis

Press release: Pensions funding improves as gilt yields hit highest point since October 2022 market turmoil

Published: Mar 2023


6th March 2023

  • XPS Pensions Group estimates the aggregate funding level of UK pension schemes increased over February to 105%.
  • A rise in gilt yields of 0.39%, to the highest levels seen since October’s market turmoil, led to a decrease in the value of liabilities, improving the funding level of schemes.
  • The FTSE 100 hit a record high of over 8,000 points towards the middle of the month amid positive company earnings, a weakening pound and hope that both inflation and interest rates may be nearing their peak.
  • In this environment and with funding levels strengthening, schemes can begin to focus more attention on their long-term investment strategies.

Across February 2023, UK pension schemes’ funding positions have risen by c.£30bn against long-term funding targets. Based on assets of £1,447bn and liabilities of £1,377bn, the aggregate funding level of UK pension schemes on a long-term target basis was 105% as of 27 February 2023.

Felix Currell, Senior Investment Consultant at XPS Pensions Group said: “It’s been an encouraging start to the year for UK pension schemes which have benefited from the positive performance of global equity markets and rising gilt yields leading to an increase in funding levels. Despite the hope that central banks may be coming to the end of a period of aggressive rate hikes, there remains risks to the outlook of the global economy. Trustees will be hoping that if yields do continue to rise that growth markets do not splutter.”

An online version of XPS DB:UK is available here:

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