The Pensions Regulator has published its latest Annual Funding Statement for trustees and sponsoring employers of occupational defined benefit pension schemes, setting out expectations under the new funding regime. With most schemes now in surplus, it expects schemes in the 2025/26 valuation tranche to shift from deficit recovery towards clear, well-evidenced endgame planning, using valuations as a strategic tool to develop or refine long-term funding and investment strategies, whether through run-on, superfund consolidation or buyout. The statement reports that, as at 31 December 2025, 60% of schemes were in surplus on a buyout basis, rising to 80% on a low dependency basis and 90% on a technical provisions basis. It is particularly relevant for schemes with valuation dates between 22 September 2025 and 21 September 2026, now termed Tranche 25/26, and also clarifies aspects of the code for all schemes. Around 80% of schemes should be able to meet the Fast Track approach under the new defined benefit funding regime, which would bring proportionately less regulatory engagement and simpler reporting, although Fast Track will not suit all schemes. Trustees are also told to remain alert to economic and geopolitical uncertainty, including risks to investment strategies and employer covenants as schemes move closer to their long-term objectives. The regulator will shortly publish a statement on issues trustees should consider around surplus release, with final regulations expected to come into force in 2027. The Annual Funding Statement also highlights the government's proposed changes to surplus release rules included in the Pensions Scheme Bill, which received Royal Assent on 29 April 2026.
The Pensions Regulator 2026-05-06
United Kingdom The Pensions Regulator tells defined benefit schemes to focus on endgame planning as 60 percent reach buyout surplus
The Pensions Regulator has issued its latest Annual Funding Statement for trustees and sponsoring employers of occupational defined benefit schemes, setting expectations under the new funding regime as schemes move from deficit recovery to endgame planning. It notes that, as at 31 December 2025, 60% of schemes were in surplus on a buyout basis, 80% on a low dependency basis and 90% on a technical provisions basis, and that around 80% of schemes should be able to meet the Fast Track approach. The regulator will shortly publish a statement on surplus release issues, and the Annual Funding Statement flags proposed changes to surplus release rules in the Pensions Scheme Bill, which received Royal Assent on 29 April 2026.