Reviewing endgame strategies for UK DB schemes – top tips for success

In recent years, many trustees and sponsors have turned their attention towards the preferred long-term strategy for their scheme – especially as funding levels have improved with many now being able to buyout without needing additional funding. The dawn of the new funding regime has also promoted further focus on this.

Whilst alternative endgame solutions, like captives and superfunds, are suitable for some, most are considering the trade-off between a “run-on” and a “buyout” strategy. Stakeholders are consciously evaluating the opportunities, costs and risks in determining the strategy they believe is best for their scheme. For some, reaching buyout as soon as affordable remains the focus, but for others where meaningful value is at stake, running on has gained in popularity despite the prospect of buying out becoming a more realistic ambition.

In 2025, we expect many more schemes to dive deeper into these strategic reviews – and with this in mind, we set out five top tips to help trustees and sponsors navigate through the process.

What's next?

If the Government moves forward in the areas previously consulted on around earlier and easier access to surplus, either through refunds to the employer in ongoing scenarios or one-off lump sum discretionary benefits for members, then the opportunity set for running on will widen further. However, even absent this, it is still worth trustees and sponsors understanding the merits of plausible alternative endgame strategies for their schemes as soon as possible as some opportunities for use of surplus are likely to exist already. As time marches on, the opportunities available to a scheme can decline and, without the context being understood, stakeholders could come to regret some actions they take.