The latest data published by Mercer’s Pensions Risk Survey shows that the accounting deficit of defined benefit (DB) pension schemes for the UK’s 350 largest listed companies was £76 billion at the end of April 2021, an improvement from £80 billion at the end of March.

The improvement was driven by a £16 billion increase in asset values.

Asset values were £799 billion compared to £783 billion at the end of March.

Mercer said liability values increased from £863 billion at March 31, 2021, to £875 billion at the end of April 2021, driven by a fall in corporate bond yields and offset by a small fall in inflation expectations.

Tess Page, Partner and Trustee Leader at Mercer, said: “April saw further gains in growth asset prices, with the spring optimism observed last month continuing despite the nip in the air.

“Economic data continues to look robust, with a recovery in services on the back of vaccination efforts and the gradual lifting of social distancing measures.

“With pension scheme funding levels stable, many trustee boards and sponsors are focusing on long term strategy and risk management, particularly with the recent announcements from The Pensions Regulator on the proposed new code of practice and requirements for schemes to conduct an ‘Own Risk Assessment’.

“Though still in review, the code of conduct is set to be a crucial tool to support modern scheme governance, adding value for members, trustees and their sponsors …

“We remain live to the risk that the true cost and economic impact of the pandemic is yet to fully play out.

“With this in mind, pension trustees may wish to consider taking opportunities to reduce risk when and where possible.”

Mercer’s Pensions Risk Survey data relates to about 50% of all UK pension scheme liabilities, with analysis focused on pension deficits calculated using the approach companies have to adopt for their corporate accounts.