While the majority (67 per cent) of defined benefit (DB) schemes are set to undertake a final insurance deal in the next five years, nearly a fifth (18 per cent) of DB schemes don't expect to reach their end game for more than 10 years, research from LCP has revealed.

The research highlighted the diverse experience of schemes over the past year, revealing that while nearly a third (30 per cent) of DB schemes saw a substantial improvement in funding relative to a buyout of at least 7.5 per cent, 15 per cent saw their funding level deteriorate over the past year.

The recent market volatility has also triggered a number of reviews, as the survey found that around one in three DB schemes reviewed their investment strategy last year, while one in four had revisited their long-term journey plan.

LCP also suggested that these figures could be set to rise further in the coming months.

In particular, LCP found that while the triennial valuation process remained an important focus for many, planning for a de-risking transaction topped the poll this year.

Smaller schemes, those with assets under £500m, were the most likely to aim to fully insure their scheme, with 75 per cent citing this as their goal, compared to 42 per cent of the largest schemes, those with assets over £5bn.

Instead, the research found that the majority of these largest schemes were planning long-term self-sufficiency rather than insurance.

Commenting on the findings, LCP partner, Mary Spencer, stated: “The last twelve months have seen a time of considerable market turmoil combined with regulatory change and uncertainty.

"The need for pension schemes to be nimble and respond to changing circumstances has never been more important.

“Many are now in a much stronger position and are planning for their final steps, such as insurance transactions within the next five years, but it’s not over until it’s over and with a busy insurance market, a carefully planned process is essential. Some have seen their goal move further away and need to re-think their journey.

“Our survey also shows that for the largest schemes, in particular, insurance is by no means the only answer, with long-term self-sufficiency a common objective.

“It seems very likely that the next few years will continue to see considerable political and economic uncertainty, and trustees and sponsors will need to work closely together to ensure that their scheme is not blown off course.”

More broadly, the survey revealed that 'hot topics' such as climate change risks and embracing diversity, equity and inclusion (DEI) were important issues for many schemes, with a greater awareness on climate change and DEI issues compared to last year.

However, LCP found that there is limited progress in taking action, as 30 per cent of respondents suggested that climate change was not relevant to their scheme or burdensome, while 20 per cent thought the same for DEI.

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