The vast majority (93 per cent) of financial decision makers in the UK believe that their company’s pension scheme is posing a risk to their business’s balance sheet, despite the fact that 86 per cent of DB schemes currently have a surplus, research from LawDeb has revealed.

The findings showed that 7 per cent believe their pension scheme presents a significant risk, while 57 per cent categorise it as a moderate risk.

In addition to this, a further 29 per cent agree that their scheme brings limited risk, leaving only 6 per cent of decision-makers who see no risk at all from their pension scheme.

Cyber threats stood out as the top driver of risk, cited by 92 per cent of finance decision-makers as a key business risk, while 18 per centof respondents classified it as the most severe risk.

In addition to this, 91 per cent highlighted concerns around financial risk and returning to deficit, and 91 per cent also cited people risk as a key business concern, with particular concerns raised over the potential for increased or unsustainable workloads.

Environmental, social and governance (ESG) risk, such as the scheme’s ESG strategy not being aligned with business ambitions, is also weighing heavily on finance decision-makers (90 per cent), as are fears of data breaches (88 per cent).

LawDeb also noted that although reputational risk ranks as having the least risk on balance sheets, a significant number of finance decision makers (85 per cent) share concerns over its impact.

Commenting on the findings, LawDeb Pensions managing director, Sankar Mahalingham, commented: “The research shines a light on the increasing pressures businesses face in managing pension schemes, alongside broader financial and operational risks.

"It also exposes an interesting juxtaposition - more than four-fifths of DB schemes are in surplus, yet business leaders are still incredibly conscious of risk.

“Addressing these risks proactively is crucial for maintaining financial stability and business resilience, while ensuring the scheme continues to provide benefits to its members.

“As our findings highlight, increasingly unsustainable workloads are posing significant risk to schemes. Utilising independent trustees and governance providers can be an effective way to remove the burden currently weighing heavily on business leaders.

“As well as reducing risk, this can also ensure that members are kept at the heart of any decisions relating to a scheme.”

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