The majority (88%) of trustees of UK defined benefit (DB) pension schemes expect to decide on an endgame solution strategy within the next five years, according to a survey from TPT Retirement Solutions.

Nearly four in 10 (39%) expect to do so in the next two years.

The survey, of 100 trustees, found that almost all participants were beginning preparations for entering endgame.

Consolidation into multi-trust solution (41%), consolidation into a superfund (40%), a capital backed journey plan (36%) and consolidation into a DB master trust (34%) were the most popular options being considered among the trustees, according to the survey.

Run-on, meanwhile, is being considered by 28% and a bulk annuity or buyout is being considered by 27%.

TPT said that, on average, trustees expected schemes to be managed as they currently are for 3.64 years before putting put in place an endgame strategy, while only 4% envisioned schemes taking over 10 years to reach that stage. Half of respondents (49%) said they expected to continue managing their schemes as they currently are for between three and five years.

planning table charts meeting

TPT’s survey indicated that, on average, trustees expected schemes to be managed as they currently are for 3.64 years before putting put in place an endgame strategy

TPT also said that buyout was no longer the default endgame choice, citing 87% of trustees saying they considered running-on as attractive as an endgame solution. 

A fifth of respondents (20%) considered the strength of the sponsor’s covenant to be the most important factor for considering this option, while the surplus share for members (17%), and being able to return a share of the surplus to employers (13%) were also  important factors for trustees when considering run-on.

Nicholas Clapp, commercial director at TPT Retirement Solutions, said: “Our research shows that the majority of trustees see run-on as an attractive option and an increasing number of trustees are now considering run-on as part of their endgame strategy.”

He said that the evolution of rules governing surplus returns are likely to see increasing focus on this, and the changes which are needed to the scheme’s operating model in order for this to work.

He added: “In reality, every scheme is a period of “run-on” until a decision is made to transfer the scheme to an insurer or superfund.”

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Pamela is IPE's UK correspondent. Before joining IPE in May 2023, she spent five years writing about the insurance industry. During her career so far she won awards for Most Promising Newcomer in 2020 and Best Investigative Article in 2022 from the British Insurance Brokers Association, and was also highly commended at the WTW Media Awards for Insurance Features Journalist of The Year.View full Profile

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