New research: surplus rules could encourage run-on and greater allocations to growth assets
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With the new DB funding code now in force and funding levels still favourable, UK schemes should have more clarity than ever about their endgames. However, new research by mallowstreet, conducted in partnership with Brightwell, suggests that larger DB schemes are keeping all options open. The government’s announcement on surplus extraction is motivating them not only run on, but also invest more in growth assets.
A waiting game ahead of major change
The research was conducted in January 2025 and covers 21 large corporate DB schemes over £1bn, with combined assets over £290bn.
While 38% plan to run on either as an open or closed scheme, an equal proportion have not yet decided on their endgame.
And while 81% have revisited their journey plan in the last one to two years, only about half of those targeting buy-out and run-on have formally agreed it.
Surplus rules will shift endgame strategies
Changes to surplus rules may alter scheme decisions, particularly for schemes on a path to buy-out but with a longer horizon, or those who are yet to choose an endgame.
A clear framework could make sponsors more open to funding schemes more aggressively, which can secure if not improve benefits, but run-on remains the preferred option for those building surplus.
Schemes in run-on will increase growth assets
Two-thirds of schemes targeting run-on are increasing growth assets, but doing so in tandem with LDI and longevity protection.
Additionally, these schemes show signs of greater willingness to allow more market and illiquidity risk on their balance sheet, without fully re-risking.
Undecided schemes are mixing insurance solutions with growth assets, ensuring they keep their options open.
Download the full report for more details
For more information on:
Why schemes might change their endgames
What they want to see from surplus rules and run-on guidance
How they are adapting the investment strategy and journey plan
Where the admin burden is increasing the most, and
What burning issues schemes are looking to solve
Please download your full copy of the second annual Endgame & Priorities Report HERE.
