More than two-thirds of defined benefit pension schemes are considering how to use surplus, but most still face barriers to reaching their endgame.
This is according to research from LCP’s latest DB Pensions Priorities report, based on a survey of more than 200 DB pension schemes, which found that 69 per cent are considering how to make use of surplus, while only 31 per cent said they do not expect to manage surplus.
The report also found growing interest in run-on strategies, with almost half of schemes with assets between £500m and £1bn that have agreed an endgame now planning to run on rather than immediately targeting buyout.
Meanwhile, around 70 per cent of schemes said they continue to face obstacles to progressing towards their endgame.
Additionally, differences in views between trustees and sponsors are becoming a more significant barrier, cited by 24 per cent of respondents compared with 14 per cent last year.
LCP also found that 55 per cent of schemes are now fully funded on a buyout basis, up from 43 per cent in 2025, while three-quarters of schemes intending to fully insure benefits expect to complete their final transaction within five years.
Additionally, cybersecurity and AI-related risks ranked among the top three concerns for almost three-quarters of respondents. The report found AI adoption remains at an early stage, with 37 per cent of schemes reporting limited or pilot use, while 31 per cent said they have no plans to use AI.
LCP partner and report author Stefan Kemp says: “DB schemes are operating in a very different environment from even a few years ago. Improved funding levels, greater flexibility around surplus and a growing range of endgame options mean trustees and sponsors have more choices than ever before.
“For many, the priority now is not to simply decide on their endgame, but to understand the options and controls they have available as part of that choice, and how these can be used to deliver the best outcomes for members and sponsors.”
LCP head of pensions developments Jon Forsyth says: “Our findings point to a market that is becoming more sophisticated and more confident in tackling new opportunities.
“But progress is not always straightforward. While funding barriers have reduced for many schemes, differences of opinion between key stakeholders are becoming a more significant obstacle. Reaching consensus on surplus, endgame planning and risk strategy is now emerging as one of the biggest challenges facing schemes.”
