Employers need to ensure they keep on top of pensions changes as a business essential and failure to do so could result in missed opportunities, LCP has warned.

The report highlighted changes to the legislative and regulatory framework for defined benefit (DB) pension scheme surpluses, with a new surplus regime expected to come into force from April 2027.

It said sponsors were increasingly considering how pension assets could support wider business objectives while continuing to protect members' benefits.

LCP said sponsors and trustees now had a wider range of DB endgame options available, including run-on, superfund transfers, sponsor swaps, capital-backed arrangements and insurance transactions.

The consultancy urged employers to develop a clear strategy for any future surplus and engage with trustees early, arguing that schemes should prioritise readiness and establish decision-making frameworks that can adapt to changing circumstances.

LCP partner and head of corporate consulting, Gordon Watchorn, said: "For the first time in history, with well- funded DB schemes and more flexibility than ever, now is a time for DB schemes to support sponsors after decades of the reverse.

“Well designed and managed frameworks can provide protection for members whilst providing significant value to sponsors and a return on investment – whether that be getting rid of pension risk all together to free up resources and management time or an intentional strategy to access value from the scheme over time.”

The report also highlighted developments in the defined contribution (DC) market and the potential role of collective defined contribution (CDC) schemes.

It said employers should review whether their pension arrangements are likely to deliver the retirement outcomes they want for employees amid ongoing reforms designed to improve value for money, increase scheme scale and expand investment opportunities.

Scheme sponsors should also understand the direction of travel of their pension provider and assess how default investment strategies are evolving.

Commenting, LCP senior consultant, Dev Gandhi, said employers should be looking “both backwards and forwards” on pensions.

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