Market volatility and illiquid assets remain key challenges for defined benefit (DB) pension schemes pursuing a buy-in or buyout strategy, although many are making steady progress, with close to one-fifth of schemes reporting no barriers to executing their plans.

The research from Standard Life, which included views from 100 DB trustees managing schemes with assets of £100m or more, revealed a continued positive shift in sentiment, as nearly one in five (17 per cent) schemes report no barriers to endgame planning

However, challenges persist, as one third (33 per cent) of trustees said that market volatility remained a key barrier, while 31 per cent cited illiquid assets as a key concern.

However, Standard Life pointed out that trustees are deploying a range of strategies, including secondary market sales, sponsor loans, and deferred premiums, to manage exposure effectively and ensure readiness for buy-in or buyout.

Whilst data issues also remained a key challenge, cited by 31 per cent of trustees surveyed, Standard Life found that progress is being made as the majority (83 per cent) have already completed or are undertaking a data cleanse, with a further one-in-eight (13 per cent) planning to do so.

"While challenges such as market volatility and illiquid assets remain, many schemes are increasingly well-prepared to manage them," Standard Life BPA and individual retirement, managing director, Claire Altman, said.

"We’re seeing a more strategic and collaborative approach, with trustees strengthening governance, refining investment strategies, and engaging with advisers and insurers earlier in the process.

“This growing preparedness is translating into steady, tangible progress across the market.”

Broader challenges also remained, as nearly one-in-three (29 per cent) trustees still expressed concerns about funding levels, and a similar amount (27 per cent) cited general preparedness as a barrier.

However, Standard Life argued that stronger market conditions and improved investment performances are helping schemes progress, with around one-in-ten (9 per cent) expecting their funding position to improve or remain stable over the coming year.

According to the firm, these improvements are enabling more trustees to accelerate endgame timelines and focus on execution, while confidence in insurer engagement is also strengthening.

Indeed, Standard Life found that, of the nearly half of schemes targeting a buy-in or buyout as their endgame strategy, over two-thirds (70 per cent) are planning to approach an insurer for buy-in within the next three years, and two-fifths (40 per cent) are intending to do so within the next twelve months.

However, Altman emphasised that early preparation will remain key to maintaining momentum and securing capacity.

"Schemes that act early and take advantage of their current funding strength will be in the best position to move decisively when market conditions align," she stated.

"Acting from a position of readiness enables trustees to move quickly and confidently when the time is right.

“The market is evolving rapidly, and well-prepared schemes are now shaping its direction. Those that plan early, stay engaged, and act decisively will be best placed to complete their endgame journey and deliver long-term security for their members.”

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