Iain Clacher & Con Keating
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In this brief technical report the authors examine discrepancies between reported funding ratios of Defined Benefit pension funds and the widely broadcast narrative of highly significant improvements of those ratios across the sector. The funding ratio is the most widely used metric of scheme sufficiency, but the authors conclude another more intuitive metric - schemes assets as a proportion of undiscounted projected liabilities would be better. With this measure, declines in asset values or increases in projected liabilities will be reported as decreases in coverage.