The aggregate surplus of UK defined benefit (DB) pension schemes remained strong at around £211bn at the end of July, up £5bn from the end of June, XPS Group has found, although it cautioned that the latest mortality trends could slow further increases.

On a long-term funding target basis, the latest figures indicated that schemes held assets of £1,163bn against liabilities of £952bn at the end of July 2025, equating to a funding level of 122 per cent.

This represents a £4bn (24 per cent) increase in surplus over the past year.

XPS Group warned, however, that incorporating the latest mortality data into funding assumptions could increase liabilities by around 1 per cent, potentially reducing both funding levels and surpluses.

The warning follows the release of the Continuous Mortality Investigation’s (CMI) latest mortality projections model in June 2025, which incorporates data up to 2024.

The model now explicitly allows for differing mortality trends, including the increased mortality rates seen during the Covid-19 pandemic - reflecting the industry’s adaptation to post-pandemic patterns.

For the first time since the pandemic, the projections indicate a modest rise in life expectancy, although levels remain below pre-pandemic expectations.

Indeed, in 2024, England and Wales recorded the lowest all-age mortality rates on record, with rates in 2025 so far tracking at similar levels.

However, these headline figures mask significant age-related variation.

Mortality at pensioner ages has fallen sharply, while younger working-age adults continue to experience higher mortality than the 2014–23 average.

XPS Group senior consultant, Hannah Traylen, warned that the improvements seen in the data were being driven mainly by reductions in mortality at older ages.

“Trustees and employers should remain cautious in applying these trends to their funding assumptions, as younger working-age adults continue to experience higher mortality rates than pre-pandemic levels,” she said.

“Schemes must carefully tailor their mortality assumptions to reflect the unique demographic profile of their membership - taking into account factors such as age, socioeconomic status and the ongoing impacts of the pandemic - before assessing surplus levels and making strategic decisions,” added Traylen.

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