Behind this aggregate funding figure, the funding levels for individual schemes vary, with levels ranging between around 90% and over 150%. This underlines the need for all schemes to consider the endgame strategy that is right for their own specific circumstances and objectives, rather than follow any one size fits all solution or wider market trends.
This theme has been echoed in public statements by the Pensions Regulator, with comments last month stressing the importance of Trustees considering endgame and surplus options and focussing on the long-term interests of pension scheme members. As part of this, they have suggested that “trustees should consider… surplus use to strengthen covenants or improve member outcomes.”
The 2025 Pension Schemes Bill introduces greater flexibilities around DB pensions endgames, the use of DB surpluses, and DB Superfunds. Clara’s four pioneering superfund transactions each represent important milestones for the market and have demonstrated the viability of the superfund model, providing new options for pension schemes, and accelerating innovation in the DB endgame space. With potential new entrants and proposed easements to gateway tests, underfunded schemes now face a pivotal choice: continue on their current journey or explore earlier superfund transfers. It’s likely we’ll see further developments in the endgame solution space, offering sponsors and trustees more choice and ability to optimise their strategy.
For schemes already fully funded on buyout, there is growing interest in using the existing surplus to provide pension benefits – this includes ongoing DC contributions to a sponsor’s current workforce (that may be currently earning benefits outside of the DB Trust). Solutions are available and we have experience in implementing these to deliver better outcomes for key pensions stakeholders.
Jonathan Griffith, Partner and Head of Endgame Innovation at LCP: “With robust funding levels and over £55bn in surplus across FTSE100 schemes, the conversation has firmly shifted from funding to future-proofing and delivering value. We’ve been able to help trustees and pension scheme sponsors use the tools, flexibility, and market innovation to turn strong funding into stronger outcomes.”
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