Since the election in the United States, the total UK defined benefit deficit has gone down by £35bn. 

Additionally, according to Hymans Robertson, the defined benefit deficit is also down by over £200bn from a record high of over £1 trillion in August.  Human resource experts explain this is driven by rising bond yields, partially due to inflation expectations from the policy pledges promised by President-Elect Donald Trump.

One partner at Hymans Robertson goes on to say that there have been signals from the Federal Reserve of higher economic growth and rising interest rates which have been “amplified significantly by what the market has been calling the ‘Trumpflation trade’.”

The real question remains, though: what does this mean for defined benefit schemes?  HR experts unfortunately cannot give a straight answer.  If anything, what we already know about deficits is that they can be extremely volatile.  Scheme holders should still keep their eye on the long-term goal and try to remain unaffected by short-term political uncertainties.

HR experts advise that in order to maintain a long-term focus it is important to know what your long-term target is, and what the measurements of success look like.