Defined benefit (DB) pension schemes’ surpluses rose by 10.6 per cent year-on-year to £220bn relative to long-term targets at the end of January 2026, analysis from XPS Group has shown.

This represented an increase from £199bn at the end of January 2025, highlighting the continued improvement in scheme funding positions amid industry focus on reforms to surplus release.

Total scheme assets were £1,180bn at the end of last month, while liabilities stood at £960bn on a long-term funding basis.

Assets were broadly stable over the month, with small rises in gilt yields being largely offset by a slight increase in inflation expectations, resulting in a small fall in the value of matching assets.

Meanwhile, returns from growth assets supported a modest improvement in asset values overall.

Scheme liabilities fell slightly over January 2026, with a small increase in gilt yields mostly offset by a slight rise in inflation expectations.

XPS said that the continued resilient funding levels of many UK DB schemes further emphasised the potential opportunities that could be unlocked once flexibilities around the use of surplus come into force.

It noted that a consultation on surplus release regulations is expected later this year, followed by regulatory guidance in late 2026 or early 2027.

“Having the option to access surplus for well-funded schemes could be a positive step for trustees, members and sponsors,” said XPS Group senior consultant, Jill Fletcher.

“As strong funding positions persist, some trustees and sponsors will be keenly awaiting the regulations that will enable this, so that strategic plans to run-on their schemes whilst making use of these flexibilities can be put into action.”

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