Pensions - Articles - DB Pensions adopt objective-led approach to endgame planning

Trustees and corporate sponsors of UK Defined Benefit (DB) pension schemes should move away from treating insurance buyout as an automatic default and instead adopt an "objective-led" approach to endgame planning, according to a roundtable report released today by the SPP.

 

The report, titled Choosing an Endgame: Timing, Trade-offs, and Trustee Decision-Making, synthesises insights from a major industry roundtable of leading actuaries, trustees, legal advisers, investment managers, and covenant specialists.

 

The paper challenges traditional industry momentum by examining how improved funding positions, a £160 billion aggregate surplus across UK DB schemes, and new alternatives such as superfunds and capital run-on strategies have transformed the endgame landscape.

 

 

Industry professionals suggest trustee boards and sponsors should not assume buyout is the only valid destination. Strategic planning must start with clear, ranked objectives balancing benefit security, affordability, discretionary member upside, and corporate balance sheet risk.

 

With surpluses across many schemes, an immediate buyout may permanently forfeit potential financial upsides for members and sponsors. Trustees face a nuanced value judgement between securing immediate guaranteed outcomes versus managed run-on strategies.

 

While smaller schemes face higher per-member governance costs that often make insurance buyout the most efficient path, scale alone should not dictate strategy.

 

To manage adviser conflicts and market volatility, schemes are advised to establish documented contingency frameworks ("Plan A and Plan B") with explicit, agreed financial triggers to shift direction when market or sponsor conditions change.

 

SPP Covenant Committee member Alex Beecraft, who chaired the roundtable, said: "The traditional assumption that buyout with an insurance company represents the default, automatic 'endgame' is increasingly being challenged. As the DB pension landscape evolves, decision-making should shift from being outcome-led to objective-led, balancing long-term member security against economic upside, commercial realities, and the expanding array of risk management tools available today. Crucially, where schemes elect to run-on, this should not be viewed as a permanent rejection of a risk transfer transaction, but rather a timing decision of 'not now'."