Defined benefit (DB) pension schemes with assets between £10m and £250m could find themselves becoming the new ‘squeezed middle’, Hymans Robertson has said, warning that endgame options for these schemes are likely to be more limited.

Hymans Robertson estimated that there are currently over 2,500 schemes in the 'squeezed middle', many of which want to insure, but the market doesn’t have the capacity for all of them.

However, the firm argued that there steps these schemes can take to stay in control and ensure they get a good outcome, urging these 'squeezed middle' schemes to assess the new landscape, understand the new options and challenges and reset their course.

"The pace of change for DB schemes has been unprecedented in recent years, and this has created a new landscape with some exciting new and emerging solutions," Hymans Robertson partner, Jonathan Seed, said.

"However there are challenges as well, in particular for the 2,500 schemes in the squeezed middle."

In particular, the firm stressed the need for a plan B, warning that, “unfortunately”, there will be some schemes who are financially ready to transact but won’t be able because they haven’t done the right preparation.

Equally, for schemes looking to run on, it argued that a Plan B is still "essential" to deal with market shocks or unexpected covenant issues.

“Strategies for the squeezed middle also need to be flexible so that schemes can adapt to changes in the market," Seed said.

"That means having a clear target, but also having a ‘plan B’ to deal with market shocks or unexpected scheme issues like a sudden change in covenant strength.

"‘Set and forget’ strategies should be replaced by dynamic strategies to ensure schemes stay on track but can also adapt to change and take advantage of new opportunities that may arise."

Seed also stressed the need for schemes to continue making progress on key data and governance tasks, whatever their strategic target is, arguing that “getting your data and benefits insurance ready sooner rather than later will be worth it”.

“Finally, schemes must remember that time can be a valuable ally," he added, emphasising the need to move towards their target at "the right pace, not the fastest pace".

"Doing so lets schemes benefit from valuable tailwinds, including reducing insurance costs and expected investment outperformance. It also gives time to make progress on essential data and governance tasks," he said.

"Keeping a close eye on the strategic target and moving towards it at the right pace will help to ensure a good outcome for schemes in the squeezed middle.”

---