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Continued strong scheme funding levels bring exciting opportunities – LCP

Pensions & benefits Endgame strategy and journey planning Strategic journey planning
Jonathan Griffith Partner & Head of Endgame Innovation

Latest results by LCP’s Pensions Explorer at 30th June 2024 show that the combined IAS19 pensions surplus for the UK pension schemes of FTSE100 companies currently stands at around £60bn.

This magnitude of surplus presents many schemes, and the industry as a whole, with some exciting opportunities. Pension schemes have options available in the current regulatory regime that can improve outcomes and, whilst continuing to protect member benefits, turn the scheme into a real asset.

The general election may mean uncertainty on many issues. It is clear, however, that there is alignment on generating positive investment from pension schemes, with Labour stating in their manifesto that they will “act to increase investment from pension funds in UK markets” and to “adopt reforms to ensure that workplace pension schemes take advantage of consolidation and scale, to deliver better returns for UK savers and greater productive investment for UK PLC”. Pension schemes wishing to take action now are supported by this direction of travel from the government.

In addition, as highlighted in LCP’s recent longevity report, new mortality projections that were released in April would be expected, once adopted, to boost pension surpluses even further.

Jonathan Griffith, Partner and Head of Endgame Innovation at LCP, commented: “The general election should not mean schemes pause work on their endgame planning. The strong funding levels are persisting, and we are now seeing more schemes take action – building flexible strategies that protect members and meet their objectives in changing market and regulatory conditions.”

Aaron Chaderton, Consultant, and part of the Endgame Innovation team at LCP, added: “It is great that the industry as a whole is talking about innovative ways to make scheme endgames as beneficial as possible. Innovation and being able to access better outcomes for our clients is central to what we’re doing.”

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