Pension scheme surpluses remain strong as endgame strategy comes into focus

Latest results from LCP’s Pensions Explorer, as at 30 June 2026, show that the UK defined benefit pension schemes of FTSE 100 companies were in a strong position, with an accounting surplus of around £55bn (120% funding level).

Since the end of June, the aggregate surplus has remained stable despite political changes and wider global uncertainty. Market movements on Andy Burnham’s first day as Prime Minister changed the aggregate surplus by less than £1bn.

The quarter saw further momentum in the development of alternative defined benefit endgame solutions alongside a supportive policy backdrop for innovation. In April, Clara completed its fifth superfund transaction, with approximately 500 members and £43 million of assets transferring from the Videndum scheme. The transaction, Clara’s smallest to date, used a new open-section structure intended to make superfund consolidation more accessible to smaller schemes.

Policy developments also point towards greater flexibility for well-funded schemes. The Pension Schemes Act 2026 received Royal Assent in April, while the Government launched a consultation on regulations which could broaden how defined benefit surpluses are used. Following publication of the updated DB roadmap, regulations are now expected to take effect in April 2027.

Meanwhile, the DWP announced in June that it will review the flexible apportionment arrangement or “FAA” mechanism, following its use in the Stagecoach Group Pension Scheme transfer to Aberdeen. Together, these developments underline the Government’s intention to enable a wider range of endgame options and support innovation, while maintaining appropriate protections for members.

Jonathan Griffith, Partner and Head of Endgame Innovation at LCP, said: “With FTSE 100 schemes continuing to hold substantial surpluses, surplus is no longer simply a measure of financial strength — it is creating a genuine strategic choice about their long-term future.

“Trustees and sponsors are increasingly able to make deliberate choices about their endgame, with the market responding through a broader range of options, from insurance and run-on to consolidation and other evolving solutions designed for smaller schemes as well as the largest pension funds.

“The priority now is to turn improved funding into a well-defined strategy: one which considers risk, return, flexibility, and the objectives of both the scheme and sponsor. With the market broadening and the Government’s evolving policy agenda signalling support for innovation, we expect endgame strategy to move even further up the boardroom agenda.”