Latest results by LCP’s Pensions Explorer at 30th September 2023 show that the combined IAS19 pensions surplus for the UK pension schemes of FTSE100 companies currently stands at around £70bn. Despite ongoing market volatility, it means that UK pensions remain in an incredibly strong financial position. 

We are now just over one year on from the mini-budget and the resulting liquidity fallout, and whilst it is good news that well-funded pension schemes appear to be here to stay, LCP is  urging schemes to:

• Better understand possible factors that could potentially move the funding position materially in either direction. In particular, schemes should develop an improved understanding of how evolving mortality trends in the wake of the pandemic might impact their members.
• Review their endgame options. Improved pension scheme funding positions are not a flash-in-the-pan. This gives sponsors and trustees the time to consider options, make informed decisions, and ensure that the chosen endgame path is still in the best interests of all stakeholders.

Jonathan Griffith, Partner at LCP, commented: “It’s good news that consistently strong and buoyant funding levels appear to be the new normal. Trustees and sponsors should focus on areas with remaining uncertainty, such as mortality trends, to make sure that their schemes continue to remain in as robust a shape as possible. 

“Given the stable funding levels, sponsors and Trustees have the time to review their position and reassess their endgame strategy. When it comes to endgame options, all sponsors should embrace the wide range of available opportunities and innovations to ensure the best possible long-term outcome for all stakeholders.”