Data and benefit issues causing headaches but schemes feeling more resilient when it comes to cyber risk

70% of schemes surveyed in LCP’s annual pensions industry report believe that there is a barrier to progressing the journey to endgame, with around a third citing data quality and benefit issues as being their main concerns. 

LCP’s DB pensions priorities 2025 highlights that there is positive intent to take action in various areas, from endgame strategy to climate change and diversity, equity and inclusion. However, it identifies that there is more action to be taken.

LCP data shows that 43% of schemes are now fully funded on a buy-out basis, up from 30% last year. On their journey to achieve their goals, funding level aside, the most common barrier cited by schemes are general data issues along with benefit or legal issues. These have the potential to result in further expensive data exercises.

Smaller schemes were those most likely to highlight data, benefit and legal issues. This group of schemes are also most likely to be targeting full insurance and so there may be a concern that lengthy data cleanse exercises could delay eventual wind-up.

By contrast, for larger schemes over £5bn, illiquid assets emerged as the most frequently cited barrier to get to endgame. This perhaps reflects the more advanced investment strategies typically in place at this scale. That said, around two thirds of schemes over £500m intend to run-on, at least in the short-term.

In terms of the key risks that schemes are most concerned about, while cyber risk remains the biggest worry of survey respondents, schemes now consider themselves more prepared, with 61% of schemes now rating preparedness 7 or higher out of ten – a notable rise from 38% last year.

Other key findings in the report include:

• A clear spectrum of endgames is evident, with 55% actively thinking about surplus strategy, whilst 56% of respondents are targeting full insurance (some following a period of run-on).  Larger schemes are more likely to be targeting run-on.
• A quarter of respondents haven’t agreed the endgame for their scheme. This is a material decision with a significant impact on members’ benefit security and the finances of sponsors. The new DB Funding Code also requires trustees and sponsors to agree a long-term strategy so we expect this will become a priority for many schemes. The Pensions Regulator has provided guidance to help with these discussions.
• Over the last five years that the survey has been running there has been an overall increase in the proportion of schemes who have made a net zero commitment across all scheme sizes. The proportion with net zero targets increases with scheme size but over the last year there has been a reduction at the smaller end, indicating that the pace is slowing.
• The proportion of schemes who are supportive of or taking action on DEI issues has increased for the third year in a row. In aggregate, the figure has risen to around 85%, up from 80% in 2023.

Jon Forsyth report author and LCP Partner, added:

“Our survey shows that data and benefit issues are clearly a big headache to a lot of schemes, especially as more approach their endgame. The announcement that the Government will introduce legislation to help deal with issues from the Virgin Media case may ease some fears, but we’re still awaiting key details there. Often data and benefits projects are underestimated but with a clear plan and the right support from experienced experts you can keep on track and navigate any bumps in the road.”

Mary Spencer, report author and LCP Partner, commented:

“Over the last year we have seen a marked widening of discussions around endgame strategy, supporting many schemes to revisit previous decisions on the back of a changing landscape of improved funding positions, stakeholder views and a furry of regulatory news.

“On the back of the Pensions Bill, schemes should now have the various tools to enable them to make and begin to put into practice important strategic decisions – whether that’s focused on endgame planning or tacking systemic risks.”