Recent defined benefit (DB) pension funding progress and large numbers of bulk annuity deals are expected to offer "hope" for DB schemes looking to derisk, according to Broadstone.

The Broadstone Sirius Index, which monitors how various pension scheme strategies are performing on their journey to self-sufficiency, found that its 50 per cent hedged scheme reached full funding on a self-sufficiency basis in September.

The fully hedged scheme also saw a positive gain with funding rising from 69.1 per cent to 69.5 per cent.

In addition to this, both schemes saw their deficit reduce by around £0.2m, with the half-hedged scheme now reaching a surplus for the first time.

Broadstone pointed out that these latest improvements also follow a strong year to-date in the pensions insurance market for smaller schemes, with a record number of transactions at this end of the market.

However, it warned that the second half of the year is set to be dominated by larger (£1bn plus) transactions, warning that smaller schemes could be overlooked.

Broadstone head of trustee services, Chris Rice, said: "When we started the index with a half-hedged scheme that was 80 per cent funded at the start of 2022, the idea it would be nudging towards full self-sufficiency funding throughout 2024 and now reaching it would have been considered relatively unlikely.

“Achieving this milestone at the end of September highlights the tricky decisions many schemes now face in the wake of funding improvements.

"Insurance remains attractive and the high number of deals completed so far this year provides reassurance a transaction is achievable.

“Headwinds remain however, with a view that for the second half of this year smaller schemes might be overlooked by some very large deals, as well as the benefit uncertainty created by the Section 37 / Virgin Media case.

“This uncertainty suggests an opportune time for schemes to consider the options available to them, but for those who are determined to insure, the opportunity to transact will present itself for well-prepared schemes.”

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