Following recent regulatory and market developments, 2025 represents an important year for schemes reviewing their endgame strategy, Aon has suggested.

Withsignificant improvements in funding for defined benefit pension schemes over the last two years, many sponsoring employers and trustee boards have already reconsidered their scheme’s endgame, the firm claimed.

However, it said the rest of the year represented an important period for schemes that have yet to commit to a particular approach.

“There are several factors at play,” explained Aon associate partner and head of UK endgame strategy, Paul Dooley.

“Inevitably, sponsors’ and trustees’ views on the way forward vary widely, and some have now changed their outlook.

“For example, the government’s statement of 28 January suggested that schemes will have more flexibility in the future on how they can use surpluses to benefit sponsors and members.

“The bulk annuity market has seen change too, with four new insurers entering it over the last 18 months.

“There has also been innovation. The Wates Pension Scheme transaction was a landmark case in the superfund market – the first with an ongoing sponsor."

"And we’ve seen further developments in the pension captive space, including the recent M&G risk-sharing deal,” Dooley added.

Aon UK endgame strategy team partner, James Patten, argued that the cornerstone of determining the most appropriate endgame was “achieving a consensus” with stakeholders on their joint objectives.

“While some sponsoring employers and trustee boards have an instinctive view on their preferred endgame, it can be difficult to determine for others. For example, it can be hard to weigh up run-on versus risk settlement without understanding the potential risks and rewards of a run-on strategy.”

“For this reason, we’ve invested further in our financial modelling capability with Aon’s pension endgame analyser tool,” Patten said.

“This has additional functionality, including the ability to analyse integrating employer covenant risk and the dependencies around surplus distribution, helping schemes make better-informed decisions about which endgame to pursue by understanding the potential outcomes for both the sponsor and the members,” he concluded.

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