As UK defined benefit schemes move from deficit management to surplus strategy, run-on is now a more credible alternative to buyout.
After years in which buyout was the default destination for many UK defined benefit (DB) pensions schemes, the endgame debate is changing. Stronger funding levels have created sizeable surpluses across the market, while new surplus release regulations expected from 2027 could give well-funded schemes a more practical route to access and share that value.
With the funding threshold confirmed at full funding on a low dependency basis – a level approximately 80% of UK DB schemes already exceed – trustees and sponsors face a more immediate strategic question: is the investment portfolio configured for a buyout or is it structured to support surplus release, and which approach is preferable?
