FTSE100 DB surpluses remain 'robust' at £60bn

Defined benefit (DB) pension scheme funding levels remained “robust” at the end of the first quarter of 2024, with continued surpluses generating an increased appetite to run-on, according to research from LCP.

LCP’s latest Pensions Explorer showed that the combined IAS19 pension surplus for FTSE 100 companies’ DB schemes stood at £60bn as at 31 March 2024.

Despite the market volatility, LCP said that UK schemes continue to be in a “strong financial position” with "material" surplus figures disclosed for over two years.

LCP suggested that this sustained level of surplus presents pension schemes with an opportunity, in line with the findings of the Work and Pensions Committee's report into DB schemes published last week.

According to LCP, an increasing number of its clients are now investigating run-on, and a "good number" are already implementing run-on strategies, with pension schemes with aggregate liabilities in excess of £100bn considering run-on for at least the short term.

Commenting on the update, LCP partner and head of endgame innovation, Jonathan Griffith said: “Once again we finish another quarter with funding levels very strong. This trend is clearly not a novelty and is here to stay. 

“Because of that, we are seeing more and more pension schemes reassess their endgame target and timeframes and seek to build efficient flexible strategies that are future-proof and stand-up to the changing market and regulatory situations.”

"It is exciting to see an increasing number of LCP's clients consider alternative endgame solutions and refine their approach to reflect their current circumstances,” added LCP consultant and part of the endgame innovation team, Aaron Chaderton.

“With the right framework in place, this can lead to better outcomes for members, trustees, and scheme sponsors."

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