PwC comments on the Pensions Regulator’s new guidance for trustees and employers considering endgame options

Matt Cooper, Pensions Director and PwC Head of Pension Risk Transfer, said:  

“We welcome the regulator’s new guidance setting out its expectation that trustees and employers should be exploring a broader array of endgame solutions beyond traditional buy-out. This quickly follows last week’s announcement by the Department for Work and Pensions on options for surplus sharing. This new guidance reinforces the radically changing market dynamic as to how the government is looking for the industry to view DB pension scheme funding. 

“TPR has acknowledged that improving funding levels, along with new innovative solutions offer different ways to deliver members’ promised benefits, and in certain cases these solutions could lead to better member outcomes. TPR also states that there may be valid reasons for pension schemes to run-on even if they are fully funded on a buyout measure. PwC analysis suggests that there are over 700 larger DB pension schemes with over £800bn of assets who will likely need to weigh up the choice between buying out and running on in the near term. 

“Many of the solutions TPR refers to are well tested in the market, for example buy-ins, fiduciary management, longevity insurance. Others, such as superfunds, capital back arrangements, are new and novel.

“In light of this changing market dynamic, schemes are increasingly exploring how they should react. In certain cases we are seeing schemes pausing buy-in processes to reconsider the options available. We have also seen first hand how adopting new solutions can lead to better member outcomes.” 

ENDS

Notes to editor

In 2024 PwC advised on the first superfund transaction with a solvent sponsor and the first of its kind value-share bulk purchase annuity and previously advised on the first capital backed arrangement. The market certainly has the capacity to deliver more of these transactions and we would expect to see more schemes exploring and executing these in the coming years.