Three in four DB schemes see buy-out funding improve but a third plan to run on, new survey suggests
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PMI and Schroders survey reveals how better-funded DB schemes are navigating increasingly complex endgame choices
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45% target buy-in or buy-out within ten years, while a third plan to run on indefinitely
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Trustees urged to strengthen skills and governance to align asset allocation with their chosen endgame, in line with TPR expectations
Improved funding is giving DB pension schemes greater endgame choice, putting pressure on trustees to ensure their investment, liquidity and governance strategies are fit for purpose, a new report shows.
The PMI and Schroders UK Pension Scheme Survey 2026 found 68% of respondents saw their technical provisions funding improve, while 75% reported stronger funding on a buy-out basis. But stronger funding has not led schemes towards a single endgame.
While 45% are targeting buy-in or buy-out within ten years, 33% expect to run on indefinitely. A further 18% plan a limited period of run-on to generate surplus before insurance, while 5% selected a consolidator route.
The findings point to a DB market moving from deficit recovery towards strategic choice, with trustees and sponsors deciding whether to secure benefits through insurance, run on, use surplus strategically or retain flexibility.
Many schemes are already adapting to this more complex environment, with liquidity moving up the investment agenda and greater attention being paid to trustee capability, professional support and cyber resilience.
As endgame choices widen, the experience of these schemes highlights the importance of ensuring investment strategy, governance and skills keep pace with improved funding. This directly aligns with a recent call from The Pensions Regulator for clear endgame planning as DB schemes remain in surplus.
He said: “Better funding is giving schemes greater choice, and this research shows there is no single destination. Some will move towards buy-out, others will run on. That is not indecision, but a reflection of a diverse market where good strategy must be scheme specific.
“The important test is whether those choices are informed, evidence-led and well governed, with trustees equipped with the knowledge and confidence to exercise sound judgement.
“That is why the PMI matters. For more than fifty years, the PMI has supported professional excellence across pensions through qualifications, development, research and the standards we champion. There may be different destinations, but professional excellence must remain the constant.”
Ajeet Manjrekar, Head of Solutions at Schroders, said:
“The findings of this year’s survey show that improved funding has created more options for pension schemes, but greater choice also brings more complex decisions. Whether trustees are targeting insurance, planning to run on or exploring alternative consolidation solutions, success will increasingly depend on aligning investment strategy and have the appropriate governance framework in place.
"The next phase of the endgame is not simply about funding levels, but about having the discipline and expertise to turn stronger positions into better member outcomes.”
Liquidity moves up the agenda
The survey points to a continued shift towards lower-risk portfolios, with 52% saying liquidity will become a higher priority in investment decision-making over the next 12 months.
A third expect to reduce equity allocations and 43% anticipate reducing illiquid assets. Meanwhile, 33% expect to increase corporate bonds and 23% LDI allocations.
Liquidity is increasingly shaping portfolio design. Schemes approaching insurance need transferable or readily saleable assets, while those running on need sufficient liquidity to meet pension payments. LDI strategies also require resilient collateral arrangements.
Governance models stable but demands on trustees increasing
Investment advisory remains the dominant governance model, used by 65% of respondents, compared with 23% using fiduciary management and 13% operating in-house. Just two respondents plan to change their governance model in the next 12 months.
However, demands on existing arrangements are increasing. Strategy advice is a high priority for 58%, cashflow and liquidity advice for 40%, while 58% already have at least one professional trustee.
Trustee capability and succession are also emerging as execution risks. Training was identified by 41% of respondents as part of their approach to strengthening investment governance.
Cyber risk becomes a board-level priority
Cyber risk was identified by 41% of respondents, making it the clearest emerging governance theme. Provider resilience, data quality and member communications were also highlighted.
Technology adoption is also growing, with around a quarter already using AI, data analytics or other digital tools and a similar proportion considering doing so over the next 12 months.
Productive assets face the endgame test
Forty per cent of respondents have no current allocation to UK productive assets, with infrastructure the most frequently identified allocation among those that do invest.
Liquidity and shorter investment horizons can make illiquid investments less appropriate for schemes approaching buy-in or buy-out. Those planning to run on may have greater scope for private markets and productive assets where they fit their cashflow and governance requirements.
The report concludes that improved funding has created more choice but put greater emphasis on execution. It recommends trustees align asset allocation with their chosen endgame, assess advisers on outcomes as well as costs, strengthen cyber resilience and data governance, and ensure their governance capabilities match the decisions ahead.
ENDS
Notes to editors:
About the research
The fifth annual PMI and Schroders UK pension scheme survey examines how trustees, sponsors and advisers are responding to the next phase of DB investment governance, covering funding, endgame choice, liquidity, governance capacity and emerging operational risks.
The survey analyses the perspectives of UK pension schemes based on 41 survey responses collected between May and August 2026. The survey results should be read as a directional view and provide a directional view of investment governance priorities rather than a statistically representative sample of the UK DB market.
The research was produced through the DB Investment Governance Forum, created in partnership with PMI and bringing together third-party evaluation firms and senior independent trustees.
Key findings at a glance
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75% reported improved buy-out funding.
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68% reported improved technical provisions funding.
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45% are targeting buy-in or buy-out within ten years.
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33% plan to run on indefinitely.
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18% expect a limited run-on before insurance.
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52% expect liquidity to become a greater investment priority.
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58% have at least one professional trustee.
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41% identified cyber risk as an emerging governance issue.
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In May, TPR issued its Annual Funding Statement and urged DB schemes to push for clear endgame planning as DB schemes remain in surplus. Read more here.
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Girish Menezes’ speech at the PMI Endgame Solutions conference can be found here [LINK]
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The Pensions Management Institute (PMI) is the UK’s leading professional body for those working in pensions and retirement savings. With over 10,000 members, PMI represents the broadest range of pensions professionals and trustees in the country.
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Its members manage and advise some of the world’s largest pension schemes and make key decisions on substantial financial matters. With more than £1 trillion invested in UK pensions, PMI members play a vital role in shaping the nation’s financial future. With five decades of experience, PMI remains at the forefront of pensions education and thought leadership.
Press contact:
For media enquiries, please contact Matt Adams, Head of Media and PR at pressoffice@pensions-pmi.org.uk.