The aggregate surplus of FTSE 100 defined benefit (DB) pension schemes was around £55bn at the end of June 2026, according to LCP’s Pensions Explorer.

The schemes had an estimated accounting funding level of 120 per cent as at 30 June, leaving trustees and sponsors with greater scope to consider a broader range of long-term endgame strategies.

LCP noted that the aggregate position had remained broadly stable since the end of June despite political developments and wider global uncertainty.

Market movements on Andy Burnham’s first day as Prime Minister changed the estimated surplus by less than £1bn, it added.

The consultancy argued that the strength of current funding positions meant surpluses were increasingly becoming a strategic consideration rather than solely a measure of scheme security.

This came as the market for alternative DB endgame solutions continued to develop during the second quarter of the year.

In April, Clara completed its fifth superfund transaction, with around 500 members and £43m of assets transferring from the Videndum pension scheme.

The deal was Clara’s smallest transaction to date and used a new open-section structure intended to make superfund consolidation more accessible to smaller schemes.

LCP said the transaction demonstrated how the range of potential endgame options was broadening beyond the largest pension schemes.

This included insurance buy-in and buyout, continued run-on, superfund consolidation and other emerging arrangements designed to meet different scheme and sponsor objectives.

Policy developments were also expected to provide well-funded schemes with greater flexibility.

The Pension Schemes Act 2026 received Royal Assent in April, while the government subsequently launched a consultation on regulations that could broaden the circumstances in which DB surpluses may be used.

Following the publication of the updated DB roadmap, the regulations are expected to take effect in April 2027.

The Department for Work and Pensions also announced in June that it would review the flexible apportionment arrangement (FAA) mechanism following its use in the transfer of the Stagecoach Group Pension Scheme to Aberdeen.

LCP said these developments reflected the government’s intention to support a wider range of endgame options and market innovation while retaining appropriate protections for members.

LCP partner and head of endgame innovation, Jonathan Griffith, argued that the scale of current surpluses was creating genuine strategic choice for trustees and sponsors.

“Trustees and sponsors are increasingly able to make deliberate choices about their endgame, with the market responding through a broader range of options, from insurance and run-on to consolidation and other evolving solutions designed for smaller schemes as well as the largest pension funds," he said.

Griffith added that schemes should now focus on converting improved funding positions into clearly defined long-term strategies.

“The priority now is to turn improved funding into a well-defined strategy: one which considers risk, return, flexibility, and the objectives of both the scheme and sponsor,” he continued.

“With the market broadening and the government’s evolving policy agenda signalling support for innovation, we expect endgame strategy to move even further up the boardroom agenda.”

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