UK DB scheme surpluses rise £2bn amid PPF levy suspension

Defined benefit (DB) pension schemes have maintained a £222bn aggregate surplus against long-term funding targets, up £2bn in September and £48bn year-on-year, XPS Group has estimated.

The firm’s analysis indicated that schemes were expected to maintain their strong funding positions, with many well-insulated from market volatility.

XPS Pensions Group senior consultant, Jill Fletcher, explained that many schemes are now well hedged against changes in gilt yields, which should provide stability as markets evolve.

“For trustees and sponsors, these surplus levels create new strategic options but also demand careful planning,” she added.

Her comments follow the recent announcement from the Pension Protection Fund (PPF) confirming that no PPF levies will be charged in 2025/26, after the lifeboat fund reported a surplus of around £14.1bn in its latest annual report and accounts.

The PPF attributed its strengthened position to strong investment returns and the accumulation of levies collected in previous years.

The decision marks the first time in the PPF’s 20-year history that schemes will not be required to pay a levy and is expected to provide further financial relief for DB schemes and their sponsors, who are already benefiting from improved funding levels.

The positive outlook for DB funding has been a key theme throughout 2025, with recent analysis noting that schemes have seen a significant turnaround in recent years, supported by rising gilt yields, de-risking activity and a growing number moving into surplus.

However, industry commentators have cautioned that sustained improvements could bring new challenges, including how to manage surplus assets and ensure fair member outcomes.

As Fletcher noted, “these surplus levels create new strategic options”, but also highlight the need for careful long-term planning as schemes weigh the benefits of buyout, run-on strategies, or other options for surplus use.

Indeed, Hymans Robertson urged DB pension schemes to take advantage of the sharp improvement in funding levels and consider the strategic value of a ‘purposeful pause’ in their endgame planning.

Echoing this, LCP said the conversation was now “shifting away from funding,” towards more “bespoke” endgame strategies for schemes.



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