Over 60% of DB pension schemes expect to be fully funded within three years, according to XPS Pensions Group poll

Over 60% of DB pension schemes expect to be fully funded within three years, according to XPS Pensions Group poll

28 Mar 2023

62% of DB schemes are now expecting to be fully funded for buyout within the next 3 years, an XPS Pensions Group survey of over 300 trustees and employers has found.

The poll, conducted at a recent XPS Live event, “Delivering the Endgame for your Scheme”, indicated that demand for buyout is likely to increase given UK pension schemes’ funding position. XPS’s DB:UK tracker indicates that UK DB pension schemes have as a whole are now around 95% funded on a buyout basis, up from 69% at the start of 2022, which has driven record activity in the bulk annuity market.

XPS’s Bulk Annuity Tracker has already recorded c.£10bn in transactions, making it the busiest ever start to any year for the bulk annuity market.

Stephen Purves, Head of Risk Settlement commented: “The funding gains we have seen during 2022 have been locked into by lots of schemes via asset de-risking and we are seeing the demand for bulk annuities continuing to build significantly. As things stand, it’s clear that 2023 is already looking likely to be a record year.

“Currently the insurance market is coping with demand and pricing levels are still competitive, but as we progress through 2023, insurer capacity is likely to be stretched and insurers may become more and more selective.”