Schemes suffer funding level drop of 1.5 points in Q2

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Scheme funding levels fell by 1.5 percentage points over the second quarter, Investment Solutions research reveals.

The consultant said that, over the second quarter, scheme funding levels fell from 75.6% on 31 March to 74.1% on the 30 June.

It said the fall was due to a three percentage point increase in liability values - a decline offset by a 1.5 percentage point increase in asset values.

Investment Solutions said the increase in liabilities was due to falling gilt yields - yields which had dropped back as investors sought refuge in safe-haven investments such as index-linked and fixed UK government bonds following concerns around peripheral European debt, pushing up the prices of bonds. Increases in bond prices leads to falls in the yield on those bonds.

Despite this, it said equity markers had risen over the quarter - with the FTSE All Share index rising by 1.9% and MSCI World increasing by 0.5% in sterling terms over the period.

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