Capita has updated its defined benefit (DB) scheme funding tracker for December showing schemes had seen a further improvement in their positions despite sharp asset price falls.
The consultancy said its analysis of FTSE 350 sponsored DB schemes revealed that assets had fallen by £21bn from £633bn to £612bn during December but noted liabilities had fallen by £38bn from £647bn to £609bn over the same period.
It calculated the total surplus of these schemes was £3bn and overall funding levels had risen from 97.8% to 100.5%.
Capita head of corporate consulting Tim Rimmer explained that funding levels had improved during December because of rises in corporate bond yields, which were partly offset by falls in gilts and equities.
But he warned that sponsors should remain cautious because of the level of volatility in the market.
Rimmer said: "Sponsors should be wary of the current volatility of the market and in particular, the risks that high levels of short-term inflation, interest rate rises and the economic slowdown are currently presenting.
"As schemes approach full funding sponsors should switch their focus to end game planning, locking in the gains from the last year and finding the most efficient route of dealing with the scheme in the long term."
This comes as XPS Pensions Group estimated the aggregate funding level of all UK DB schemes improved by around £400bn over 2022 - something it said equated to around 20% on a long-term target basis.
It said that, based on assets of £1,458bn and liabilities of £1,388bn, the aggregate funding level of UK pension schemes on a long-term target basis was 105% at the end of December 2022 - representing an increase of just under 20% during 2022.
XPS said that, following a year of significant volatility, long-term gilt yields ended the year around three percentage points higher than they were at the start - adding that inflation also proved a source of considerable impact for some schemes, with the sharp rise in observed inflation combined with caps applying to benefits meant some pensioners income began to fall behind the rising cost of living.
XPS Pensions Group actuary Tom Birkin said: "From February's shock Russian invasion of Ukraine to the gilt market meltdown in October, 2022 has been a year of seismic market movements - and the upshot for pension schemes is that most find themselves in a much healthier position than they were at the start of the year."
