Number of £1bn+ pension schemes almost doubles in 8 years

The number of pension schemes with assets over £1bn has increased from 154 in 2013 to 290 in 2021, representing a 90 per cent increase, Barnett Waddingham's (BW) Large Schemes 2021 research has revealed.

The growth in large pension schemes was highlighted by BW as demonstration that there are a lot more schemes and employers with "more financially significant pension challenges", amid a step-change in regulatory expectations on governance and risk management.

Alongside this growth, the was evidence of an acceleration in de-risking, which was also seen in the 2019 survey, and follows a "sustained trend" amongst pension schemes towards de-risking investment strategies in recent years.

The trend towards closure of defined benefit (DB) schemes also continued, as the survey found that the number of schemes closed to accrual had increased from 15 per cent in 2013 to 55 per cent in 2021.

In addition to this, the research revealed that a total of 15 per cent of DB pension schemes over £5bn are expected to have an average time to buyout of less than two years.

However, there was a slowing up in transfer activity, with 70 per cent of schemes in 2021 showing a further decrease in the amounts transferred compared to 2020 data.

This builds on the similar trend seen in 2020, when 60 per cent of schemes showed a decrease in transfer activity.

Commenting on the findings, BW partner, Ali Tayebbi, said: “While in many ways, this analysis shows a steady continuation of established trends, this is perhaps notable in itself given the nature of the period in question.

"The funding of large pension schemes appears on average to have been very robust to the turbulent economic markets of the past 18 months.

“Although the Covid-19 pandemic does not appear to have set back these pension schemes, many schemes still have a long way to go to get to their endgames.

"The demand for de-risking actions will continue to accelerate and schemes will need to be more proactive than ever in getting themselves to the ‘front of the queue’ - whether that is for independent financial advisor (IFA) support on liability management exercises, with insurers for buy-in / buyout policies or with sponsors for management time.”

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