The UK's defined benefit pension landscape has undergone a profound transformation in recent years. Regulatory reforms, shifting market dynamics, and improved funding positions have brought new opportunities and challenges for trustees and sponsors.
From deficit to surplus
We've seen a remarkable shift from deficit to surplus. Rising interest rates, strong investment returns, and slower longevity improvements mean many schemes are now fully funded, or even in surplus, on a buy-out basis. As of June 2025, PwC's Buy-out Index reports a surplus position of £95bn1 across nearly 5,000 schemes. It's no surprise that the conversation has now moved to endgame planning.
Regulatory pressures and market dynamics
Regulatory pressures and market dynamics are also evolving. Government initiatives such as the Mansion House reforms and the Pension Schemes Bill will introduce greater flexibility around surplus extraction and encourage alternatives to traditional buy-out, such as run-on and other forms of consolidation, including pension superfunds. Our research2 in July 2024 found that 87% of trustees viewed run-on as an attractive endgame option. The Pensions Regulator now expects trustees to regularly review their strategy for delivering promised benefits and has recognised alternative endgame options for well-funded schemes in its guidance3. Technical Actuarial Standard 300 requirements5 also mean actuaries must evaluate alternative options alongside insurance buy out, ensuring advice considers a full range of possibilities for each scheme.
Rising costs and complexity
Meanwhile, DB schemes are becoming more complex and costly to manage. Despite improved funding, scheme expenses are increasing due to project fees - like those for the Pensions Dashboard and GMP equalisation. Our research3 found that 90% of trustees have seen scheme running costs increase by more than 10%, primarily due to actuarial and data-related services. Although new surplus extraction rules under consultation could help mitigate these costs, they may also introduce further complexity and advisory fees.
The pace of change in the DB pensions market has sparked a wave of innovation, reshaping the options available to trustees and sponsors. The right solution for your scheme and members will depend on your unique circumstances, but one thing is clear: now is the time to pause, review your operating model, and simplify how your scheme is run - placing renewed focus on governance, strategy, and endgame.
Explore the range of consolidation paths and endgame options to help trustees and sponsors make confident, informed decisions about their scheme's future, in the link below.
Sources
1 PwC | Pensions overhaul could unlock up to 25% of DB scheme value
2 TPT Retirement Solutions research on challenges facing DB scheme trustees, July 2024
3 The Pensions Regulator | New models and options in defined benefit pensions schemes
