Pensions should move to the centre of corporate strategy in 2026, as regulatory reform and market developments give sponsors greater flexibility over defined benefit (DB) endgame planning, LCP partner and head of corporate consulting, Gordon Watchorn, has argued.

He warned that in an environment marked by economic uncertainty and competing business pressures, it may be tempting to view pensions as a distraction rather than an opportunity.

However, Watchorn stressed that 2025 marked a turning point for pensions, with reforms that give sponsors “unprecedented flexibility,”

LCP described how the Pension Schemes Bill has been a key catalyst for change, introducing measures to resolve the Virgin Media issue and easing restrictions on the use of DB surpluses in ongoing schemes.

These changes, the consultancy said, have accelerated a shift in mindset among sponsors, with pensions increasingly viewed as a strategic asset rather than a legacy liability.

Indeed, LCP’s 2025 Pension Priorities survey found that even before the Bill was published, around two-thirds of DB schemes with assets over £500m were planning to run on, at least in the short term, rather than targeting immediate buyout.

Taken together, LCP suggested these developments mean 2026 could be a year in which pensions have a direct and material impact on corporate financial planning.

Echoing this, Watchorn said that with the range of viable DB endgame options expanding, sponsors should reassess their long-term objectives and consider which route best aligns with corporate priorities.

Run-on strategies in particular are expected to gain further traction, particularly if proposals in the Pension Schemes Bill make surplus distributions more straightforward and flexible, Watchorn noted.

Meanwhile, superfunds are also likely to play a bigger role, with the first transaction involving a non-distressed sponsor now complete and further easements to eligibility tests expected.

At the same time, continued attractive pricing in the insurance market through late 2025 means buy-in and buyout remain achievable options for sponsors seeking a full risk transfer.

Beyond DB, Watchorn said employers should review whether their broader pension provision remains fit for purpose, given that defined contribution (DC) and collective defined contribution (CDC) models are evolving.

It has been more than a year since Royal Mail launched the UK’s first CDC scheme, covering around 100,000 members, and LCP’s modelling suggested that members who remain in CDC throughout could receive retirement incomes around 50 per cent higher than traditional annuities on a like-for-like basis.

Nonetheless, Watchorn argued that DC pensions will remain the primary form of provision for most employers in the short to medium term.

The head of corporate consulting also stressed the importance of governance, noting that trustee board composition should be reviewed across both DB and DC schemes to ensure it remains fit for purpose.

Indeed, LCP’s research showed that more than half of UK DB and DC schemes now have a professional trustee, reflecting the increasing complexity and strategic significance of pension decision-making.

“As we move into 2026, company directors should ensure pensions are fully integrated into strategic decision-making,” Watchorn added.

“Whether it’s leveraging DB surpluses, exploring innovative options like CDC, or securing long-term risk transfer, proactive engagement can deliver better outcomes for both businesses and employees.”

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