Geopolitical and policy uncertainty were cited in a record proportion of profit warnings issued by UK-listed companies with defined benefit (DB) pension schemes in 2025, according to analysis from EY-Parthenon.

More than two in five (42 per cent) of the 63 profit warnings issued by UK-listed businesses with a DB sponsor last year referenced the impact of policy change and geopolitical uncertainty - the highest proportion recorded for this cause in more than 25 years of EY-Parthenon’s analysis.

This represented a sharp increase from just 7 per cent in 2024.

In total, 63 profit warnings were issued by UK-listed firms with DB schemes in 2025, including 15 in the fourth quarter.

While this marked a 21 per cent fall from the 80 warnings recorded in 2024, and the lowest annual total since 2021 (55 warnings), DB sponsors still accounted for more than a quarter (26 per cent) of the 240 warnings issued by all UK-listed companies during the year.

A similar proportion (27 per cent) of all UK-listed companies with a DB pension scheme have now issued at least one profit warning within the past 12 months.

Contract and order cancellations or delays were the other main drivers of warnings in 2025, cited in nearly a third (31 per cent) of cases.

EY UK pensions covenant advisory leader and EY-Parthenon partner, Karina Brookes, said the easing in overall volumes “feels more like an uneasy pause than a turning point”.

“The volume of profit warnings may have eased, especially in the second half of 2025, but the latest data continues to highlight the challenges and unprecedented impact that policy and geopolitical uncertainty are creating for sponsors and schemes,” she stated.

Brookes added that the debate around the use of surplus in pension schemes remained ongoing, ahead of new legislation easing restrictions on surpluses coming into effect, which may help to alleviate other cashflow pressures.

“In this environment, open and transparent communication between sponsors and trustees should help trustees to find the right balance between protecting members and supporting sponsor objectives,” she said.

Meanwhile, EY UK pensions consulting leader, Paul Kitson, argued that the reduced volume of total warnings in 2025 from companies with DB sponsors – the lowest level in four years – alongside generally strong funding levels across many schemes, would provide some reassurance to trustees and sponsors.

However, he warned that the growing impact of geopolitical turbulence meant they must remain vigilant.

"Sponsor covenant continues to be a key focus,” he continued.

“Trustees and companies will need to be adaptable - supporting funding discussions for schemes in deficit, while carefully assessing options for surplus release where schemes are well-funded.

"For many organisations, the challenge now is forging resilient, long-term pension strategies that reflect business and member needs in the current operating environment.”

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