Over half (54 per cent) of UK defined benefit (DB) pension schemes have been able to bring forward their endgames over the past year, research from WTW has found.

Following recent funding improvements, WTW found that only 5 per cent of DB schemes have delayed their endgame plan in the past year, while 41 per cent have not made any changes to their timings.

However, WTW pension transaction team managing director, Shelly Beard, clarified that despite the "surge" in schemes approaching the de-risking market or reducing their timescales to buyout, there are still barriers to overcome.

In particular, the survey found that getting a DB scheme 'buyout ready' was the most common barrier on the endgame journey, cited by 39 per cent of respondents.

Disposal of illiquid assets was also a key barrier, identified by 27 per cent of respondents.

However, action is being taken, as the polling found that, for those schemes that are managing illiquid assets as part of their endgame journey,70 per cent said they are currently investigating the sale of their illiquid assets on the secondary market.

The remaining schemes were investigating support from the insurance market, either by looking to agree a deferred premium structure (24 per cent) or by transferring the assets to an insurer (6 per cent).

This in line with previous research from Standard Life, which found that recent changes in the market environment have prompted two fifths (40 per cent) of DB trustees to reduce scheme allocation to illiquid assets as a priority.

However, WTW head of private market solutions, Ben Leach, noted that, "by their very nature, illiquid assets can be more difficult to dispose of at short notice and this can cause difficulties for schemes that have seen their timescales to buyout reduce significantly over the past year".

This may present less of a concern for schemes than thought, however, as Leach explained that the insurance market is becoming more flexible towards schemes with illiquid assets as it becomes a more frequent occurrence.

"Selling assets on the secondary market, or selling them back to sponsors, are increasingly common occurrences too," he continued.

"Insurers are also allowing schemes to defer part of the premium payment to allow the illiquids to run off or acquiring the assets themselves as part of a buyout agreement.

“Each pensions transaction has a different set of circumstances so it’s important for scheme advisers to have a deep understanding of both the pension scheme itself and to maximize the value of what can be very attractive assets that pension funds hold.”

Limited capacity in the bulk annuity market was also seen as a key barrier for 15 per cent of schemes, despite recent reassurances that "there are no capacity issues in the buyout market".

In addition to this, 12 per cent saw the biggest barrier as the lack of clarity on the use of scheme surpluses, while 6 per cent were held by back uncertain government regulations.

Despite these concerns, Beard suggested that there are steps pension schemes can take to improve the chances of getting good insurer engagement, such as improving the quality of their membership data and maintaining flexibility around timing.

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