I’m not sure that the collapse in bond prices has made it easier for DB pension schemes to pay the pensions they owe. Though on an accounting basis they look much healthier, I am not sure these resilient schemes are any more in “surplus” than they were in “deficit” until 2022!

It is the corporate actuaries who wanted out who now say we are at a fork in the road as if listening to them in the years leading up to the crash in 2022 can be forgotten.

What has happened is that growth assets have been sold to pay the bills of October 2022 and most DB schemes have missed the boom in growth markets over the past five years.

Sure, we can all pat ourselves on the back that gilt yields are at an all time high but what about the members of these schemes who are now covered by assets that are falling in value. Tell the DC saver who is reaching retirement and in a bond based lifestyle fund that things are good because level annuities are paying 8%!

This obsession with de-risking has not been healthy. Our DB pensions are providing less and less capital to drive the productivity that gives us better jobs and better pensions going forward. This is the context for the PWC report on how we can all consider returning to the path we followed when DB pensions were open and called Britain’s “economic miracle” by the late, great Frank Field.

Here’s what PWC have been telling the press.

UK defined benefit (DB) pension schemes maintained strong funding positions through the first quarter of 2026, according to PwC’s Pension Funding Index, which tracks UK corporate DB schemes on a low‑dependency basis, despite continued geopolitical uncertainty and heightened market volatility

As of 31 March 2026, PwC estimates that UK DB schemes held assets totalling £1,130
billion against liabilities of £920 billion on a low dependency measure. This equates to an
overall surplus of £210 billion and a funding level of 123%.

Meanwhile, PwC’s Buyout Index, which measures the estimated cost for UK defined benefit pension schemes to fully insure their liabilities via buyout with an insurer, indicated a robust funding position, with an estimated surplus of £140 billion (114% funded).

This continued improvement is creating a divergence in strategy across the market. Smaller schemes (typically under £100m) are expected to increasingly move towards insurance solutions over the next decade, while larger schemes have a broader range of options, including running on, surplus release and consolidation solutions.

Recent developments, including the Pensions Bill which is expected to receive Royal Assent in May, are likely to accelerate consideration of surplus release options. An example of a surplus release solution is the Aberdeen-Stagecoach transaction, where trustees, advised by PwC, secured an additional uplift for pension scheme members.

Saye Mkangama, Pensions Partner at PwC, said:

“We’re seeing a clear fork in the road emerging across the DB pensions landscape.

Strong and resilient funding positions mean that many pension schemes are now able to make the strategic decision about their endgame with confidence.

“For smaller schemes, insurance buyout remains an attractive and increasingly accessible option, and we expect over the next five years or so most smaller schemes to choose that route when affordable to do so.

“For larger schemes, the picture is more nuanced. With improving funding levels and regulatory change imminent, trustees and sponsors are choosing between a wider
set of options including running on, surplus release and alternative consolidation routes such as superfunds.

“What’s particularly notable is that superfund pricing continues to improve, which could make it a more compelling option for some schemes. Overall, the direction of travel is clear: larger schemes are moving from repairing deficits to actively deciding
how best to use and manage surpluses over the long term.”

 

The PwC Low Dependency Index and PwC Buyout Index figures are as follows:

Notes to editors:

The PwC Indices measure the aggregate funding position of the UK’s defined benefit
schemes. The Low Dependency Index uses a discount rate assumption of gilt yields plus
0.5% pa. “Gilts plus” measures are often collectively referred to as funding targets where
there is a low level of reliance on the company that ultimately supports the scheme. The
Buyout Index reflects PwC’s view of indicative market pricing based on their current
experience of completing buy-in and buy-out transactions. The Superfund Index (vehicles
that consolidate defined benefit pension schemes by transferring their assets and liabilities
to a well-capitalised entity) uses PwC’s estimate of how pricing is set on this measure, and is calculated relative to the Buyout Index.

The PwC Indices focus on liability value measures which schemes may be targeting in the
long-term. These differ from other liability value measures, for example, those used for the
purposes of preparing accounting disclosures or for the calculation of the levy payable to the Pension Protection Fund (“PPF”).

The PwC Indices covers the whole universe of around 5,000 UK defined benefit pension
funds. Some other market trackers cover just a minority subset (e.g. fewer than 10% of
schemes), so may show different trends.

The estimated asset value for the UK’s defined benefit pension schemes is based on
monthly data from the PPF 7800 index, tracked over each month based on the movement in asset indices using data provided by Refinitiv