The index reported the funding ratio increased from 136.1% at the end of April to 145.1% at the end of May. The total assets of the schemes were valued at £1,385.2bn while the liabilities were £954.3bn.

PPF chief finance officer and chief actuary Lisa McCrory said:

“UK government bond yields rose sharply during May, catalysed by the release of the UK inflation data which saw annual inflation falling, but more slowly than anticipated”.

This has led to predictions that the Bank of England (BofE) will have to make further increases to the policy rate to combat inflation and return it to the 2% target.

“As yields rose, the value of scheme liabilities fell. Scheme liability values used in the 7800 index were also impacted by an update to the section 179 assumptions. This served to further decrease liabilities in May, resulting in an overall fall in liability values on a section 179 basis by 3.8% taking them below £1trn for the first time since April 2011.

“As scheme assets weren’t impacted by this change in assumptions and in aggregate schemes are under-hedged to interest-rates, the estimated value of scheme assets fell more slowly resulting in an improvement in estimated funding ratios of 5.5%.”

The PPF can now celebrate the schemes that did not sell their long term assets in 2022. These are the schemes that such as Associated British Foods, that did not hedge out their interest rate liabilities and took a view that at some point interest rates would rise.

There are a few schemes , that abandoned their hedging in early 2022, realising that interest rates could only rise. These are the schemes that Lisa McCrory is celebrating.

A colossal waste of everybody’s money

On Wednesday we will see sessions of the Work and Pension Committee devoted to the future of Defined Benefits Pension schemes

I expect the discussion to focus on whether the PPF numbers properly reflect the state of Uk pensions and whether the money lost last year to collateral calls for LDI was money well spent.

I hope to hear from Derek Benstead on how his firm advised the pension industry throughout the last decade that pensions weren’t in deficit at all – using the First Actuarial Best Estimate Index.

I expect to hear concern for the tax-payer who has paid once for contributions to meet pensions and again for deficit contributions to meet the imaginary hole in pension finances.

And I hope I will hear something from employers who found the assets purchased with those deficit contributions washed away to meet the bills resulting from borrowing to fund leveraged LDI.

The cost of pensions for corporate DB plans has been enormous, it has stopped companies investing in staff, in technology and research and development. It has meant that DC pension contributions have trended towards AE minima rather than match the true cost of DB pensions.

DB schemes now find themselves in credit, for as spurious reason as they were in deficit. The country has paid a huge price to waste over £500bn in 2022 holding hedges against falling interest rates and rising gilt yields.

I urge the Work and Pensions Committee to ask why we paid that price, when quite evidently there was no need to.