Industry experts have broadly welcomed The Pensions Regulator’s (TPR) latest Annual Funding Statement (AFS), agreeing that the defined benefit (DB) pensions market has entered a new era dominated by endgame planning, surplus discussions and long-term strategy.

The regulator’s AFS and accompanying analysis showed that around 90 per cent of DB schemes are now in surplus on a technical-provisions basis, while around 80 per cent are in surplus on a low-dependency basis, and 60 per cent are in surplus on a buyout basis.

Association of Consulting Actuaries (ACA) chair, Stewart Hastie, said the statement demonstrated the continued improvement in scheme funding levels, highlighting that around 80 per cent of UK DB schemes are now fully funded on a “low risk, low-dependency basis”.

He argued that the DB landscape is now “very different” to the one TPR inherited when it was established more than 20 years ago, supporting the regulator’s call for schemes to consider their endgame options and develop surplus policies.

Hastie also pointed to the growing industry focus on surplus release, particularly following the Pension Schemes Act 2026 receiving Royal Assent.

“The next step on DB surplus is really important, and we are seeing an increasing number of schemes looking at running on for several years rather than insuring at the earliest opportunity,” he stated.

Echoing this, LCP partner and head of DB funding, Richard Soldan, said the statement reinforced the growing focus on endgame planning and the potential use of surplus.

Soldan argued that surplus policy considerations are now relevant to most schemes, including those targeting risk-transfer transactions.

“Schemes that are targeting risk transfer should certainly be considering this too - especially those that already have a surplus on a buy-out measure,” he added.

However, Soldan urged TPR to be cautious about any future tightening of Fast Track parameters, warning that current requirements may already be “close to buyout levels in some cases”, particularly for mature schemes.

LCP investment partner, Jacob Shah, also welcomed TPR’s clarification around the supportable risk and high resilience tests, noting that some earlier interpretations risked encouraging unintended behaviour by trustees.

In particular, Shah said there had been concerns around a “perceived need to re-risk low dependency investment strategies to pass the test of high resilience”.

Meanwhile, Society of Pension Professionals (SPP) DB committee chair, Jon Forsyth, warned that clearer guidance on surplus release and endgame options would now be “essential” as schemes navigate the changing funding landscape.

SPP covenant committee co-chair, Adrian Bourne, also stressed that the improved funding environment reflected “real progress and growing resilience”, with employer covenant continuing to play an important role in supporting scheme endgames.

Hymans Robertson head of DB scheme actuary, Laura McLaren, said the latest statement reinforced themes that are now “fairly well established”, including application of the new DB funding code, endgame planning and surplus management.

She also welcomed TPR’s decision to leave Fast Track parameters unchanged for now, suggesting this provided “welcome stability” for schemes still navigating the new funding regime.

McLaren added that it was positive to see TPR emphasise an “objectives first” approach before schemes decide whether to pursue Fast Track or Bespoke routes.

XPS Group partner and head of DB run-on, Tom Froggett, said the statement continued TPR’s recent recognition of the “full range of long-term strategy options” available to schemes.

He suggested the regulator’s focus on funding relative to low dependency levels aligned with expected future surplus regulations, although he noted that many schemes are increasingly considering a “run-on like an insurer” model with higher funding buffers to support more stable future surplus generation.

Froggett also welcomed TPR’s planned guidance on surplus release, arguing that trustees and employers need both clear principles and sufficient flexibility to reflect scheme-specific circumstances.

Barnett Waddingham principal, Mark Tinsley, agreed that TPR was right to encourage schemes to focus on endgame planning now, rather than waiting for further regulation or guidance.

However, he suggested that many employers remain reluctant to explicitly state buyout as their long-term objective because of concerns about unintended consequences, meaning that strategy statements may remain “more of a compliance exercise than a strategic tool” for some schemes.

Tinsley also welcomed TPR’s warning against complacency amid geopolitical uncertainty and cyber risks, as well as its call for schemes to address issues linked to the Virgin Media ruling.

Meanwhile, WTW head of scheme funding, Graham McLean, argued that this year’s statement reflected a major shift in focus compared to previous years, when the regulator was primarily concerned with repairing large deficits.

Instead, he suggested the key issue for the industry is now likely to be TPR’s forthcoming guidance on surplus release.

“TPR says it expects schemes that are running on to consider their policy on surplus, and this will be a key item on trustee board agendas this year,” he added.

McLean also highlighted TPR’s increasing emphasis on valuations becoming strategic tools to refine endgame plans, rather than simply compliance exercises tied to funding deficits.

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