These high funding levels are in the context of unparalleled levels of competition in the buy-in market. LCP’s analysis has highlighted a record-breaking number of buy-in / out transactions in 2024 (298), as insurers have responded to the rapid growth in demand from well-funded smaller schemes. The growth of the market provides competitive pricing for schemes looking to go to market over the short-term, whilst also presenting increased insurance options in the future for schemes looking to run-on for a period.
Over March we have also had the Chancellor’s Spring Statement, and this will be followed over the coming months with a response to last year’s DB Options consultation as well as a Pensions Bill. Putting all this together, it has the potential to re-write the landscape with new flexibilities around sponsors getting value from DB surplus and member benefits, as well as new investment opportunities.
Jonathan Griffith, Partner and Head of Endgame Innovation at LCP, commented: “Despite the ongoing market uncertainty, FTSE100 annual results have shown a string of positive pensions results. Funding levels have remained strong and schemes continue to plan for their chosen endgame strategy. With the potential for increased flexibility and new options in the future, there is lots for trustees and sponsors to consider and factor into their strategy now in order to ensure no risk of regret.”
Aaron Chaderton, Consultant and part of the Endgame Innovation team at LCP, added: “Schemes have great endgame possibilities at the moment. The buy-in market is strong, with competition seen across all scheme sizes, and the exciting Government surplus proposals will help schemes looking to run-on for a period or over the long-term.”
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