Surplus levels remain healthy as more schemes actively taking endgame decisions - LCP
Pensions & benefits Endgame strategy and journey planning DB pensions Corporate strategy
New results by LCP’s Pensions Explorer at 30th September 2024 show that the combined IAS19 pensions surplus for the UK pension schemes of FTSE100 companies remains at around £60bn – a level that has been sustained over the whole quarter.
This prolonged period of strong funding levels has given DB pension schemes time to plan and develop robust endgame frameworks and strategies. Coupled with new products and investments that can be tailored to scheme characteristics and specific objectives, sponsors and trustees can now plan and proceed with confidence on their chosen endgame – be it buy-out as soon as affordable, long-term run-on, or run-on to generate value for a period.
It is proving to be a very busy endgame market. Analysis by LCP’s pension risk transfer team has highlighted a record number of transactions in the year to date and projected full-year deals in excess of £40bn. As reported last month, LCP’s recent survey also suggested that more schemes are now targeting run-on. This means that more sponsors and trustees are taking active endgame decisions, which is providing the industry with lots of exciting challenges and opportunities.
Jonathan Griffith, Partner and Head of Endgame Innovation at LCP, commented: “Endgame planning is now at the forefront of many pension schemes’ decisions. The strategy has moved on from automatically targeting buy-out as soon as affordable to determining both the right endgame target and appropriate timescales, taking into account wider stakeholder objectives and the sponsor covenant.”
Aaron Chaderton, Consultant, and part of the Endgame team at LCP, added: “As we see schemes consider their endgame more actively, and new ideas and products start to come into the market, joining the two up presents interesting opportunities in the space to help boost outcomes for sponsors and members. The Funding Code will force all schemes to determine their long-term strategy, so we are going to see a lot of activity over the coming months and years.”
