Nearly three quarters (70 per cent) of defined benefit (DB) schemes believe there is at least one barrier preventing progress on their journey towards endgame, according to LCP’s Pensions Industry Report.

The most common barrier cited was general data issues along with benefit or legal issues, potentially resulting in further expensive data exercises, with around a third of DB schemes citing data quality and benefit issues as their main concerns.

The research showed that smaller schemes were most likely to highlight data, benefit and legal issues, which LCP suggested could be because this group are most likely to be targeting full insurance, so there may be a concern that lengthy data cleanse exercises could delay eventual wind-up.

For larger schemes over £5bn, meanwhile, illiquid assets emerged as the most frequently said by schemes to be the barrier to reaching the endgame.

LCP stated that this could perhaps reflect the more advanced investment strategies typically employed at this scale.

The data also found a clear spectrum of endgames, with 55 per cent of respondents actively thinking about surplus strategy, while 56 per cent are targeting full insurance (some following a period of run-on).

Meanwhile, around two thirds of schemes over £500m intend to run on, at least in the short term.

The data also showed that schemes find themselves in a strong position to reconsider their endgame strategy, with 55 per cent of schemes reassessing their approach in anticipation of the upcoming changes to surplus use.

However, a quarter of schemes have not agreed on the endgame for their scheme.

LCP said that this is a material decision with a “significant” impact on members’ benefit security and the finances of sponsors.

The firm pointed out that the new DB Funding Code also requires trustees and sponsors to agree on a long-term strategy, so it said it expects this will become a priority for many schemes.

In addition to this, LCP also pointed to the guidance The Pensions Regulator has provided to help with these discussions.

Despite the improvements in preparation, the report showed that cyber risk remained the biggest worry for survey respondents, even though schemes now consider themselves more prepared than they were last year.

Indeed, 61 per cent of respondents rated their scheme preparedness level a seven or higher out of 10, a “notable” rise from 38 per cent last year.

It also found that although there is positive intent to act in various areas, more action is needed.

When respondents were asked how they would describe the overall impact of the General Code on its scheme’s governance, 40 per cent said somewhat useful, 26 per cent said they were neutral and 11 per cent said a burden.

LCP said that overall its survey suggested that while the General Code may not have delivered "dramatic change" for all schemes, it is already having a positive impact by reinforcing the foundations of strong governance.

Going forward, the firm said the challenge is to shift the focus from compliance to value, using the code as a springboard to strengthen scheme management, build trustee confidence, and ultimately improve outcomes for members.

The survey also revealed that over the past five years that the survey has run, there has been an overall increase in the proportion of schemes that have made a net-zero commitment across all scheme sizes.

In particular, the proportion of schemes with net-zero targets increased with scheme size but over the last year there has been a reduction at the smaller end, indicating that the pace is slowing.

Meanwhile, the proportion of schemes that are supportive of or taking action on DEI issues has increased for the third year in a row, as in aggregate, the figure has risen to around 85 per cent, up from 80 per cent in 2023.

LCP partner and author of the report, Jon Forsyth, said the survey shows that data and benefit issues are "clearly a big headache” to a lot of schemes, especially as more approach their endgame.

He noted that the announcement that the government will introduce legislation to help deal with issues from the Virgin Media case could ease some fears, but said it is still awaiting key details there.

Forsyth also acknowledged that data and benefits projects are often “underestimated” but emphasised that with a “clear plan” and the “right support” from experienced experts, schemes can “keep on track and navigate any bumps in the road”.

Adding to this, LCP partner and author of the report, Mary Spencer, commented: “Over the last year we have seen a marked widening of discussions around endgame strategy, supporting many schemes to revisit previous decisions on the back of a changing landscape of improved funding positions, stakeholder views and a furry of regulatory news.

“On the back of the Pension Schemes Bill, schemes should now have the various tools to enable them to make and begin to put into practice important strategic decisions – whether that’s focused on endgame planning or tacking systemic risks.”

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