Two thirds of pension professionals are not convinced that UK defined benefit (DB) pensions have been a success story, despite recent funding improvements, research from LCP has found.

The poll, which gathered views from 360 attendees at LCP’s annual conference, found that although around 90 per cent said that their schemes were financially in a better place than three years ago, many believe that UK DB pensions are “not a success story”.

Previous research from LCP has also highlighted recent DB funding improvements, suggesting that UK DB schemes are now on average around 90 per cent funded on a buyout basis, compared to around 70 per cent as little as 5 years ago.

LCP partner, Jon Forsyth, said that it was “fascinating” that at a time when schemes are benefitting from much improved levels of funding, a wider raft of end-game opportunities, and political recognition given their importance to UK growth, most of the industry don’t see DB pensions as a success story.

Forsyth suggested that this mood could stem from the implications for members of recent high inflation, with most schemes not offering full inflation protection.

“Or it could be that so many schemes have closed before they were able to benefit from the current market conditions, and so many younger members have been forced into DC pensions with significantly worse expected outcomes," she continued.

"All this whilst sponsors have had to pay huge sums to support lower and lower returns being delivered by DB schemes.

“However, our message is that there is lots of room for optimism as there is a genuine opportunity now to revisit strategies in order to reap rewards for sponsors and scheme members.”

Adding to this, LCP partner, Steve Hodder, said: “We are seeing a sense of “missed opportunity” emerge across all key stakeholders including DB members, sponsoring employers and current DC workforces.

"And the Chancellor is wondering why the £1tn of assets in DB schemes isn’t doing more to support the UK’s growth or transition to net zero.

“We think that very well-funded DB schemes be an asset to all of these stakeholders.

“This really speaks to our “Powering Possibility in Pensions” proposal, which would enable all of these stakeholders to better benefit from DB schemes. We were delighted to see the Autumn Statement confirm that this idea will be further consulted on over the winter.”

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