UK defined benefit (DB) pension schemes closed 2025 in a robust financial position, with aggregate surpluses reaching £214bn on long-term targets, according to analysis from XPS Group.

The latest figures showed surpluses increased by £31bn year-on-year, up from £183bn at the end of 2024, underscoring the sustained improvement in DB funding levels.

XPS estimated that total scheme assets stood at £1,176bn at the end of December 2025, compared with £962bn of liabilities.

This resulted in a modest month-on-month improvement in overall funding, despite softer-than-expected returns from growth assets.

Meanwhile, scheme assets were broadly stable over the month, as relatively small movements in gilt yields and inflation expectations helped preserve the value of matching assets.

Liabilities edged down slightly, with a modest rise in gilt yields largely offset by a small increase in inflation expectations.

XPS said funding positions remained relatively stable throughout December, leaving many schemes well placed as the industry looks ahead to potential changes in how surpluses can be managed and deployed.

The analysis comes as parliament continues to progress the Pension Schemes Bill, which proposes to give trustees and employers greater flexibility to use scheme surpluses.

XPS Group senior consultant, Jill Fletcher, noted that many DB schemes were now turning their attention to endgame planning and surplus management.

“As we move into 2026, many DB pension schemes are well-funded and increasingly focused on what comes next,” Fletcher continued.

“With the Pension Schemes Bill moving through parliament, this year is set to be a defining moment for how the industry manages and uses surplus.

“Careful planning will be essential to ensure that both members and sponsoring employers are able to benefit, and that strong funding positions translate into long-term value."

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