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  • Monday, 18 August 2025
UK Defined Benefit Schemes Decline Persistently

UK Defined Benefit Schemes Decline Persistently

The annual landscape report from The Pensions Regulator (TPR) has highlighted a persistent trend in the reduction of defined benefit (DB) pension schemes across the UK. The report, titled "Occupational Defined Benefit (DB) Landscape in the UK 2023," offers insights into the status, membership levels, and assets under management of these schemes.

 

According to the latest data, the number of DB schemes decreased by 2% in 2023, dropping from 5,378 to 5,297. Furthermore, the percentage of schemes closed to future accrual, excluding those in wind-up, has risen from 70% to 72%.

 

Despite these declines, there have been improvements in scheme funding levels since 2022. The number of schemes with 100% or greater technical provision funding levels has increased significantly, from 2,565 to 3,620, while the total deficit has more than halved, decreasing from £63 billion to £28 billion.

 

Lou Davey, TPR’s interim director of regulatory policy, analysis, and advice, emphasized the significance of these findings, noting the contracting nature of the DB market. She highlighted the regulator's efforts to enhance data gathering and analysis for the report, resulting in revised figures that better reflect the current landscape.

 

Andrew Goddard, partner at Isio, pointed out that as funding levels improve, trustees and sponsors are faced with crucial decisions regarding asset and liability management. He noted a growing realization of the benefits of consolidation, particularly as a means to improve efficiencies and better protect member interests.

 

Laura McLaren, head of DB actuarial consulting at Hymans Robertson, highlighted the positive trend of schemes being estimated to be in surplus on a funding basis, with the average scheme funding level showing a notable increase. She stressed the importance of policymakers examining longer-term pension strategies, especially in light of the decreasing number of open DB schemes.

 

Amidst ongoing reforms and consultations, stakeholders in the pensions industry are navigating challenges to ensure regulations and funding codes remain appropriate and proportionate. With the landscape of DB schemes evolving, policymakers face the task of adapting strategies to address the changing needs of pension schemes and their members.

 

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