Endgame strategy and planning remain a top priority for defined benefit (DB) pension schemes amid continued strong funding levels, according to LCP.

The consultancy’s Pensions Explorer analysis found that the combined IAS 19 funding level among FTSE 100 firms’ DB schemes was around 120 per cent at the end of February.

This corresponded to a surplus of £60bn for the UK pension schemes of FTSE 100 companies.

LCP stated that recent corporate announcements had shown there was continued appetite to use DB schemes’ surpluses for the benefit of all stakeholders.

Additionally, the consultancy noted that, where appropriate, additional protections can be provided by external organisations that are offering capital-backed solutions to target a scheme’s chosen endgame strategy over preferred timeframes.

It also highlighted further developments in the bulk annuity market, with the news that Brookfield Wealth Solutions was the fourth new entrant to the market in the past 18 months.

The firm is set to begin operating in the market later this month (March) following final regulatory approval, bringing the number of market participants to a record high.

“With ongoing market uncertainty, it’s pleasing to see that funding levels have remained strong,” commented LCP partner and head of endgame innovation, Jonathan Griffith.

“We are now seeing regular announcements on all aspects of endgame strategy – including on use of surplus and insurance transactions.

“After a period of ‘wait and see’ where some schemes deferred decisions in light of 2023 Mansion House speech and DB options consultation - it’s clear that companies and trustees are now taking action and implementing decisive strategies.”

LCP associate consultant, Nieran Deivamani, added: “The continuation of DB schemes being in a surplus and the recent developments in innovative endgame solutions should translate to an increased flexibility for schemes when considering their endgame strategy whilst still providing appropriate protection to members benefits.”

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