Regulatory pressures have overtaken longevity and inflation as one of the most significant risks facing UK pension schemes, according to Aon’s Global Pension Risk Survey 2025, which also revealed that defined benefit (DB) schemes are now in their strongest position yet.

Aon’s biennial survey, which gathered responses from 230 UK pension schemes across both DB and defined contribution (DC) arrangements in the second quarter of 2025, found that regulatory risk has risen sharply up the agenda, climbing from fourth to second place among the issues most affecting DB schemes’ ability to pay benefits as they fall due.

Indeed, only the risk of unrealised investment returns ranked higher on the list of concerns.

Aon head of UK retirement policy, Matthew Arends, said the finding reflected the "mounting uncertainty" for trustees and sponsors amid an ongoing wave of reform.

He noted that while DB schemes are in a stronger position than at any point in the survey’s 20-year history, regulatory pressures are now a dominant feature of the landscape.

The pensions sector had “weathered many storms,” continued Arends, "from the global financial crisis and COVID-19 to the 2022 mini-Budget - yet continues to grapple with new forms of volatility."

“The focus on pensions by consecutive governments has also led to increasing volumes of regulatory change,” he added.

“It’s therefore not surprising to see regulatory risk climbing high on the agenda and continuing to preoccupy both sponsors and trustees.”

Arends warned that even more change lies ahead, with the Pension Schemes Bill, introduced after the survey was conducted, set to bring further reforms for both DB and DC schemes.

“These are unlikely to be the last major regulatory developments the industry will face over the next few years,” he stressed.

The survey also found that funding positions remained strong, with 39 per cent of respondents reporting that their schemes are more than fully funded on a solvency basis.

In addition, over half (52 per cent) are targeting buyout as soon as affordable, while a growing proportion are pursuing flexible or long-term run-on strategies to retain surplus or improve member outcomes.

Aon partner, Alastair McIntosh, said that although investment returns remained the top concern for DB schemes, the latest results showed a "growing focus" on data and benefit accuracy.

“Trustees increasingly recognise the importance of good data before they can complete projects such as GMP equalisation, dashboard-readiness or bulk annuity transactions,” he explained.

McIntosh also pointed out that interest rate and inflation risks have slipped down the risk list, reflecting improved funding positions and a shift in priorities since the turbulence of 2022.

“While the turmoil of the mini-Budget is still fresh in many memories, stronger funding levels mean liquidity and inflation are less of a preoccupation for trustees preparing for their endgame,” he noted.

Looking ahead, McIntosh predicted that trustees would need to balance competing demands from the macroeconomic and regulatory environment, and he suggested new topics are on the horizon.

“It was perhaps surprising that no respondents identified artificial intelligence as a risk,” he said, adding that Aon expected it to be a key area of focus in future surveys.

However, the survey found that cybersecurity incidents have continued to rise, with nearly one in five schemes reporting they have experienced an attack.

Additionally, 79 per cent have now designated a risk management function ahead of the General Code’s own risk assessment requirement in 2026.

Aon said the results demonstrated the industry’s ability to adapt despite growing complexity.

“The challenges that schemes face have grown, but so too has the toolbox available to help manage risks,” the report concluded.

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