Video transcript: UK Pensions funding strategy survey 2025 results

Transcript

UK defined benefit pensions
Pensions funding strategy survey 2025 results

Our survey is based on data collected from defined benefit pension schemes between September and November 2025.
We received responses from schemes with assets under management of around £100 billion.

Our six key findings are:
Buying out with an insurer is still the aim for the majority of schemes.
Insurer buy-in is the most intended approach submitted in the Statement of Strategy.
In addition, 40% of those schemes who are planning to select run-on have an aspirational target of buyout.

Four in five schemes will consider distributing surplus but thoughts are still developing on how this will be allocated.
Using a buyout measure plus a margin was the most common answer for the point at which surplus could be shared.
There has been a wide range of views on how surplus should be spread between the members and the employer.

Four in five schemes have not been materially affected by the DB Funding Code and 7 in 10 plan to choose the Pension Regulator’s (TPR) fast track approach.
The requirements of the Funding Code have so far had little/no impact on the majority of schemes.
However, 3 in 10 schemes plan to go down the bespoke valuation approach.

Almost all schemes plan to include an expense allowance in their Technical Provisions.
Incorporating an appropriate expense reserve has become a key part of actuarial valuations and only 2% of schemes intend to exclude one in their next Technical Provisions valuation.

Fewer than 1 in 10 schemes are expected to have a guarantee which meets the suggested ‘look through’ terms in TPR’s funding code guidance.
Our survey suggests that around a third of schemes with guarantees are looking to amend the terms of their guarantee to incorporate suggested ‘look through’ terms in TPR’s funding code guidance.
Consistent with our FY24 survey, data and administrator capacity remain the key issues for schemes.
Schemes are typically looking to solve data issues in the short-term so that they are well placed for approaching the insurance market.
Capacity in this area is also seen to be an issue given the large volume of schemes who are looking to approach the market.

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