Increasing appetite to run-on as scheme funding levels remain strong and robust
Pensions & benefits DB corporate consulting Corporate strategy
Latest results by LCP’s Pensions Explorer at 31st March 2024 show that the combined IAS19 pensions surplus for the UK pension schemes of FTSE100 companies currently stands at around £60bn. Despite market volatility, UK pensions continue to be in a strong financial position with material surplus figures disclosed for over two years.
In line with the findings of the DWP Select Committee report released last week, this sustained level of surplus presents pension schemes with an opportunity.
LCP has found an increased number of its clients investigating run-on – and a good number of those now implementing run-on strategies - with pension schemes with aggregate liabilities in excess of £100bn looking to run-on over at least the short term. This includes schemes using LCP’s run-on strategy framework, LCP Elevate, to implement new flexible endgame strategies that manage ongoing risk and security, whilst proactively looking to improve outcomes for all stakeholders.
Jonathan Griffith, Partner and Head of Endgame Innovation at LCP, commented: “Once again we finish another quarter with funding levels very strong. This trend is clearly not a novelty and is here to stay.
“Because of that, we are seeing more and more pension schemes reassess their endgame target and timeframes, and seek to build efficient flexible strategies that are future-proof and stand-up to the changing market and regulatory situations.“
Aaron Chaderton, Consultant and part of the Endgame Innovation team at LCP, added: "It is exciting to see an increasing number of LCP's clients consider alternative endgame solutions and refine their approach to reflect their current circumstances. With the right framework in place, this can lead to better outcomes for members, Trustees, and scheme sponsors. This is the driver for our LCP Elevate framework.”