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£73bn fall in DBH pension assets "stark reminder of how exposed schemes remain to rising gilt yields"

ended 02. October 2025

FINANCIAL experts have sounded the alarm over the exposure of pension schemes to rising gilt yields, following official new data showing that the value of private sector defined benefit and hybrid (DBH) pension scheme assets decreased by £73 billion (5%) between 30 September 2024 and 31 March 2025.

The main reason for this decrease was a £50 billion fall in the value of direct investments, most of which came from a fall in the value of long-term debt securities, particularly central government bonds.

Government bond yields in many developed economies, including the UK, rose between 30 September 2024 and 31 March 2025.

UK 10-year gilt yields rose from 3.99% on 30 September 2024 to 4.66% on 31 March 2025. Bond (gilt) yields hold an inverse relationship to their price, meaning an increase in yield is also a decrease in price.

Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said  “the £73bn fall in DBH pension assets is a stark reminder of how exposed schemes remain to rising gilt yields”.

He continued: "The Bank of England’s yield curves make clear that this isn’t short-term noise but a structural risk for bond-heavy portfolios. While the Pension Protection Fund provides a vital safety net, it is not watertight, and while retirees in payment may see reduced increases, those not yet retired typically face a 10% cut and weaker inflation protection.

“For higher earners in particular, that can mean a meaningful loss. Meanwhile, DC schemes have held up better through diversification, and many DB trustees are turning to buy-ins and longevity swaps to hedge. The lesson is clear: pension promises are not guaranteed, markets matter and diversification remains essential.”

Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, added: "Long-term gilts are often held to try and match the long-term liabilities of defined benefit schemes, to prevent deficits getting worse. But with inflation stubbornly high and persistent government deficits, I'd question whether this strategy makes sense.

“The government wants to foster a savings culture and have pension schemes invest in shares. Here would be a great place to start.”

Scott Gallacher, Director at Leicester-based Rowley Turton, said: “These figures are shocking when viewed in isolation, but they are largely a direct consequence of the way defined benefit schemes are managed”.

He added: "These schemes hold large amounts of long-dated gilts and other assets to match their future liabilities, so when gilt yields rise, the reported value of their assets falls. That doesn’t mean members’ pensions are unsafe — but it’s no surprise people worry when they see headlines about £73bn being wiped off pension assets.

"By contrast, in the portfolios we manage for clients, we would have expected them to broadly break even, or even make a modest profit, over the same period.

“This highlights the difference between liability-driven strategies and more diversified, client-focused investment approaches — and surely raises the question for regulators as to whether this approach remains the best strategy, particularly when a small Midlands-based IFA can outperform them by 5% in just six months.”

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Editor
Eamonn Prendergast
Chartered Financial Adviser at Palantir Financial Planning Ltd
The £73bn fall in DB pension assets is a stark reminder of how exposed schemes remain to rising gilt yields. The Bank of England’s yield curves make clear that this isn’t short-term noise but a structural risk for bond-heavy portfolios. While the Pension Protection Fund provides a vital safety net, it is not watertight, and while retirees in payment may see reduced increases, those not yet retired typically face a 10% cut and weaker inflation protection. For higher earners in particular, that can mean a meaningful loss. Meanwhile, DC schemes have held up better through diversification, and many DB trustees are turning to buy-ins and longevity swaps to hedge. The lesson is clear: pension promises are not guaranteed, markets matter and diversification remains essential.
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Editor
Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
Long-term gilts are often held to try and match the long-term liabilities of defined benefit schemes, to prevent deficits getting worse. But with inflation stubbornly high and persistent government deficits, I'd question whether this strategy makes sense. The government wants to foster a savings culture and have pension schemes invest in shares. Here would be a great place to start.
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Editor
Scott Gallacher
Director at Rowley Turton
These figures are shocking when viewed in isolation, but they are largely a direct consequence of the way defined benefit schemes are managed. These schemes hold large amounts of long-dated gilts and other assets to match their future liabilities, so when gilt yields rise, the reported value of their assets falls. That doesn’t mean members’ pensions are unsafe — but it’s no surprise people worry when they see headlines about £73bn being wiped off pension assets. By contrast, in the portfolios we manage for clients, we would have expected them to broadly break even, or even make a modest profit, over the same period. This highlights the difference between liability-driven strategies and more diversified, client-focused investment approaches — and surely raises the question for regulators as to whether this approach remains the best strategy, particularly when a small Midlands-based IFA can outperform them by 5% in just six months.