Over half of all DB schemes are in surplus on a buy-out basis as of 31 March 2025, according to The Pensions Regulator.
In its first defined benefit universe projections model report, TPR set out projections for the next 10 years of DB schemes.
Within the report, the TPR observed there were around 4,700 private sector occupational defined benefit pension schemes holding estimated assets of around £1.1 trillion, and promising pensions to around 9m savers. Most plans were gradually maturing towards the point where all members are retired and receiving pensions, although there remained a small but financially significant number of schemes who remain open to new entrants.
In recent years, TPR argued that the overall DB landscape funding position has changed significantly. The focus for most DB schemes had changed from being one of recovering deficits and trying to reach full funding on a technical provisions basis, to being fully funded on technical provisions and having a focus on long-term ‘end game’ strategies.
Sarah Tune, TPR’s director of evidence and external risk, said: “The step change in DB funding means trustees and employers must actively consider their end-game strategy. Whether that’s running-on, consolidating via a superfund, or buying out, the decisions you make today will shape the future for your members.”
The TPR report also projected that the buy-out market is expected to remain robust over the next five to six years, with annual demand from pension schemes estimated at around £40bn to £50bn in liabilities. This could rise to £60bn, although it was noted that the actual size of the market is highly sensitive to the timing and presence of large schemes coming to market.