£900m pensions decision looms for FTSE100 boards

LCP’s latest FTSE100 Pensions Explorer shows that strong defined benefit (DB) funding levels are giving sponsors and trustees more choice over how to secure benefits, generate value, and manage pension risk.

New results as at 30 September 2026 show that the UK pension schemes of FTSE100 companies continue to show strong financial health, with an aggregate IAS19 surplus of £61bn (122% funding level).  This is equivalent to around £900m for each FTSE100 company with a UK scheme - more than the average annual dividend paid by a FTSE100 company.

DB endgame legislation continues to evolve, with the DWP surplus consultation, which closed on 2 September 2026, building on the framework established by the Pension Schemes Act 2026. The proposals could make more surplus available by replacing the buyout-based threshold with a low-dependency measure, while retaining important safeguards through forward-looking funding tests and actuarial certification. 

Our experience is that trustees and sponsors of many well-funded DB schemes are already exploring how these flexibilities could create value for sponsors and members. In a recent LCP industry poll,  more than 80% of respondents viewed that potential upside should be factored into endgame strategy decisions. Any surplus distribution needs to be approached carefully. We are already helping trustees and sponsors assess these opportunities, manage the associated risks, and prepare for how the final surplus framework could integrate into endgame strategies.  

The superfund market is also developing. Clara has announced the transfer of the Arco Group Pension and Life Assurance Scheme, covering around 1,281 members and £135m of assets, as part of the wider sale of Arco Limited. Clara’s seventh transaction — and its first in support of a corporate sale — demonstrates the potential for superfunds to provide greater certainty for members while helping employers address pension liabilities during strategic transactions. This follows Clara’s recent second Small Schemes Offering transaction, reinforcing the breadth of circumstances in which superfund solutions are being explored.

Additionally, the Pensions Regulator has confirmed that further superfunds are in, or expected shortly to enter, assessment, which could expand the market next year and give schemes greater choice between increasingly differentiated endgame solutions.

Jonathan Griffith, Partner and Head of Endgame Innovation at LCP, says:

“The size and resilience of pension scheme surpluses are giving trustee and corporate boards confidence to plan the next stage of their endgame strategy. With many looking beyond insurance, the emerging surplus flexibilities create important opportunities that need careful consideration.”

George Young, Associate Consultant at LCP, added:

“Strong funding positions, combined with developments in surplus reform and the superfund market, are broadening the opportunities available to DB schemes of all sizes. Trustees and sponsors should review their endgame strategy to ensure it remains valid in the new pensions landscape.”