Big Schemes 2020 – how the largest DB pension schemes are performing

of schemes are now closed to the future accrual of benefits versus 33% five years ago

of schemes were in surplus on an accounting basis – a significant increase from 31% two years ago

of schemes experienced a decrease in transfer value payments

of deficit reduction contributions  were in excess of £100m compared to 24% last year

of assets were allocated to equities in our survey – a further fall from 16% in last year’s survey

DB endgame journey planning

Prior to the Covid-19 crisis, the Pensions Regulator’s consultation on a new DB funding code was the big industry news. While this has clearly taken something of a backseat during the current crisis, this will be pushed back onto the agenda over the coming months. DB endgame journey planning will once again be a key focus for companies and trustees.

“Once a semblance of normality returns, the thoughts of companies and trustees will turn again to how to manage their long-term pension scheme strategy. They will see the DB pensions landscape change once again.”

PAUL HOUGHTON, PARTNER

The changing DB pensions landscape:

• The decline of final salary DB schemes continues, with over 50% of the schemes analysed now closed to the future accrual of benefits.
• Prior to the current crisis, the large schemes experienced good improvements in funding levels. Recent financial market volatility will have had a varying impact depending on investment strategy, but a lot of schemes will see the endgame pushed back. 
• Our data shows a significant fall in the level of transfer value payments made from the UK’s largest schemes, suggesting the DB transfer market might have reached its peak. 
• Although our survey showed a fall in the level of deficit contributions, the shifting focus to the endgame may require companies to step up contribution levels.