Interest in run-off and run-on rises

Russell Investments' UK Defined Benefit Market Insights Study - based on the responses of 104 key stakeholders at UK defined benefit schemes in September and October this year - found that, while buyout remained the most popular endgame target, with some 38% of schemes naming it as their current goal, interest in low-dependency run-off or run=on strategies had continued to rise.

It said some 32% of respondents said they were currently targeting these endgame options, up from 27% last year – a shift Russell Investments said signalled a greater openness to bespoke long-term solutions.

But the study found there was a difference between the endgame targets of schemes differed between smaller and larger schemes.

The research found that smaller schemes tended towards buyout – with some 50% of schemes with assets of less than £1bn choosing this endgame target against 14% looking to low dependency run-off and 16% running-on.

It said larger schemes were increasingly pursuing bespoke, multi-phase strategies – with some 13% of schemes with more than £1bn of assets looking towards low dependency runoff and 22% running-on.

Despite this a sizeable proportion of schemes remained undecided about their endgame targets – with 20% of sub-£1bn schemes and 39% of £1bn-plus schemes still waiting to make a decision.

Russell Investments head of fiduciary management Simon Partridge said that, while these results weren't necessarily surprising, the survey provided evidence as to the increased interest in run-off and run-on, particularly among larger schemes.

He said: "You can start to see a theme emerging that larger schemes are either undecided on their endgame or have actually reconsidered and are now thinking about running-on or running-off over an extended period of time."

Challenges facing schemes

The survey also asked respondents what they saw as being the biggest challenges facing their scheme over the next six months.

It found that, while concerns about regulation have declined sharply (32%, down from 46% in its 2024 survey), worries about market volatility (32% in 2025 against 20% in 2024) and recession (22% in 2025 against 10% in 2024) have risen. Geopolitical risk (41%) and monetary policy uncertainty (34%) also remain key themes.

Outsourcing

The survey also found that an some 64% of respondents had either appointed or were considering appointing  an outsourced provider to strengthen their scheme's oversight and risk management.

The top reasons cited were depth of expertise (57%), manager selection quality (43%), and support for endgame planning (27%, up from 22% in 2024).

Partridge said all that many schemes that had previously outsourced or considered outsourcing to a fiduciary manager or OCIO were now looking to revisit those decisions in order to get further support, whether that is through outsourcing the entire portfolio or different parts of it.

He said this was particularly the case for those schemes considering running-on or running-off who were looking to access different sources of return, such as private markets, where schemes may need extra help around selection, risk management and governance.

Risk transfer

The survey found that some 39% of respondents had already executed a risk transfer – nearly double last year's figure.

It said, however, only 24% expect to complete one in the next 12 months, underscoring the time required to refine data, documentation, and governance – noting that, while insurer appetite remains strong, operational readiness for schemes continues to be a constraint.

Investment strategy

Russell Investments' sturdy found that DB investors remain defensively positioned, with steady allocations to investment-grade credit (24%) and government bonds (23%).

However, private credit allocations have surged to 17% (from 7%) as schemes seek higher yields while maintaining liquidity.

Despite this, Russell said that, with endgame in sight, many schemes were reducing illiquid exposures to stay flexible and transaction-ready. It said property (27%) and private equity (22%) were the most likely asset classes to see long-term reductions.

ESG commitments hold steady

The survey also found that, while just over half of schemes (54%) have now set a net-zero target, some 46% had not – with 23% still deciding what their target should be and 23% saying they would not be setting a net zero emissions target.

Of those that had set a target, most cited 2050 as a more realistic horizon as ESG integration matures within the DB framework. Overall, some 17% of schemes said they had set a target of 2030, 10% said they had set a target of 2040 and 27% said they were aiming for 2050.