FTSE 350 companies’ pension spending has conclusively moved from defined benefit (DB) pension schemes to defined contribution (DC) schemes, according to new WTW data.
Although many of these schemes have remained closed to new employees for years, businesses were still injecting significant cash sums into their DB plans to cover deficits. However the recent improvement in funding has seen this reduce, with the result that DC pensions are now the main focus of companies’ pension spending.
WTW’s FTSE 350 DB Pension Scheme Report 2026 analyses the accounts of the UK’s largest listed companies with DB pensions on their balance sheet. Together, these 79 companies disclosed more than £300bn of DB pension liabilities at the end of 2025.
In 2025, almost three-quarters of these companies’ pension contributions went to into DC plans, with £7.5bn, going into these schemes, compared to just £2.8bn for DB.
WTW says that as recently as 2022, that proportion was only 40 per cent, with DB contributions still dominating. Overall, employers’ spending on pension contributions has fallen by a third in three years.
This WTW report also found that the aggregate DB funding position for companies with 31 December year-ends showed a surplus (£33bn) for the fifth year in a row. A total of 70 per cent of companies disclosed that assets in their pension schemes exceeded liabilities as measured under the IAS19 accounting standard (representing a total surplus of £36bn). Over the year, the aggregate funding level increased marginally, from 110 per cent to 111 per cent.
It also found that almost two-thirds (63 per cent) of companies report that their DB schemes hold bulk annuities and/or longevity swaps, up from 38 per cent in 2018. The median proportion of assets that these policies represent has also increased, from 9 per cent in 2018 to 33 per cent in 2025.
Over the past year there was little movement in the proportion of DB schemes still open to accrual, with this falling from 24 per cent to 23 per cent. But WTW says this is less than half the level in 2017.
WTW head of corporate consulting Bina Mistry says: “Although most schemes had closed even to existing members by 2017, cash injections to clear deficits meant that DB plans continued to consume the bulk of pension spending until 2022. “After that, higher bond yields both improved funding positions and made the little DB accrual that remained cheaper to provide. Spending on DB pensions in 2025 was down more than 70 per cent on its 2022 level.
“With most DB plans well-funded and well-hedged, the days of companies having to make large cash injections ought to be behind us. However, some of the fall in overall pension spending may have to be reversed in response to concerns that employees saving through DC plans are typically not on course for adequate retirement incomes.
“The Pensions Commission’s interim report contained a clear message that ‘private pensions need to do more’ – though many large employers already go well beyond statutory minimum contributions.”
WTW head of UK pension accounting Charles Rodgers adds: “Deficit contributions have slowed to a trickle, dropping below £1bn in 2025. The amount of surplus refunded to companies will soon be the number to look out for. Improved funding positions have helped more schemes insure more of their liabilities, but some now intend to run on for longer and use surpluses to benefit sponsors and scheme members.
“Nonetheless, pension obligations are large enough that even small changes to assumptions can make a meaningful difference to the numbers reported to investors. Disclosed life expectancies have recently ticked up after being on a downward trend for a decade; they should rise again in 2026 accounts, particularly for schemes with older memberships.”
