Now is the time for defined benefit (DB) sponsors to reflect on their endgame strategies and take decisive action, Hymans Robertson has said, as surpluses become increasingly common and legislative change looms with the upcoming Pension Schemes Bill.

Hymans Robertson head of corporate DB, Sachin Patel, said that DB schemes are entering a “new era” as surpluses are becoming more common and the government is looking to unlock pension assets for economic growth.

As a result, he noted that the role of DB schemes is rapidly evolving. The consultancy firm explained that despite the UK DB market contracting in recent years, surpluses have become a key focus for many sponsors.

A growing number of schemes are choosing to run on - a trend it expects to accelerate in the coming years.

Hymans Robertson said that a “significant” proportion of schemes are already considering this strategy and it is predicted to have increased over the past two years.

Patel noted that with nearly £1trn held across around 300 DB schemes, the potential impact on the UK economy is “significant.”

“Yet for many sponsors, past missteps have left lasting marks, and the complexity of the current environment can be overwhelming,” he added.

“That’s why it’s more important than ever to have a clear view of the options available and to understand what recent developments mean for your scheme.”

To support sponsors navigating this complexity, Hymans Robertson has launched its DB Surpluses and Run-on paper series.

The series offers a range of resources to help corporates assess what to do with a DB surplus, evaluate whether a run-on strategy is suitable, and build a “robust” long-term strategy.

Additionally, it aims to unpack and explain the implications of several key developments that have signalled a period of transformation for DB schemes and provide sponsors with the insights to make informed, forward-looking decisions.

Patel said the opportunities were “significant” with Hymans Roberston’s analysis showing that through annual distributions, a full buyout funded £1bn scheme, with a reasonable investment strategy, could distribute over £130m (in today’s terms) across the next decade at the median level.

“These are numbers too substantial to overlook. Now is the time for sponsors to reflect on their endgame strategies and take decisive action,” he added.

“For those considering run-on, establishing strong governance and a clear decision-making framework is essential to support all stakeholders. With the Pensions Bill on the horizon, there’s no better moment for DB schemes to plan ahead.”

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