UK defined benefit pension schemes of FTSE 100 companies were in a strong position at the end of Q2, with an accounting surplus of around £55bn (120 per cent funding level).
The results come from consultancy Lane Clark & Peacock’s Pensions Explorer, reporting as of 30 June.
The report also claimed that the aggregate surplus has remained stable despite political changes and wider global uncertainty. Market movements on Andy Burnham’s first day as Prime Minister changed the aggregate surplus by less than £1bn.
LCP reported that the quarter also saw further momentum in the development of alternative defined benefit endgame solutions. In April, Clara completed its fifth superfund transaction, with approximately 500 members and £43m of assets transferring from the Videndum scheme.
The transaction, Clara’s smallest to date, used for the first time an open-section structure intended to make superfund consolidation more accessible to smaller schemes.
The UK government also launched a consultation on regulations which could broaden how defined benefit surpluses are used. Following publication of the updated DB roadmap, regulations are now expected to take effect in April 2027.
Jonathan Griffith, partner and head of endgame innovation at LCP, says: “With FTSE 100 schemes continuing to hold substantial surpluses, surplus is no longer simply a measure of financial strength; it is creating a genuine strategic choice about their long-term future.”
LCP has previously reported that more than two-thirds of defined benefit pension schemes are considering how to use surplus, but most still face barriers to reaching their endgame.
