There is a  story that Andy Smith is brace tell. He is an independent consultant and though he has skin in the game, his honesty is commendable.

The de-risking of DB pensions through the buy-in/out of insurers is slowing. I will continue his post with my thoughts on “collective pensions”.

There is hope among insurers that the second half of 2026 will see a return to the high number and large size of buy-ins and buy-outs but this assumes that employers still see pensions as a liability rather than an asset. Is it wishful thinking on their behalf?

Not only are trustees becoming aware of windfall returns of surplus, but they are re-thinking future payments into pensions.

Until recently pensions were a cash-call with the contribution into the workplace pension considered “what could be got away with”. The amount paid above the bare minimum AE requirement was a pay off with staff for closing the DB scheme for future accrual and an unfortunate legacy.

Now that too is changing.  Unions and Reward are pressing for pension contributions to be considered deferred pay. This makes DB and collective pensions a more interesting subject for the boardroom .

There is not just a demand for a new kind of collective pension which pays income in retirement and not a pot, but there is a windfall that could be used to meet calls from unions.

For those who haven’t been read this week’s blogs, I am using the term “collective pensions” as a better expression for CDC. It pushes the new pensions much more into DB territory for those negotiating salaries and is helpful for both sides. The amount that is paid into a collective pensions can vary from year to year with a base amount and with additional payments paid on top if there is an agreement that is deemed fair.

So I see the DB scheme becoming a means not just to pay DB liabilities but also a release valve for surpluses. DB surpluses can pay additional contributions into collective pensions as part of a pay settlement , rewarding current employees to a level much closer to the reward to those who have left and are receiving a DB pension.

Turning “de-risking”to “growth” through a new pension strategy.

When consultants return to thinking of pensions as “reward”, then I think that collective pensions will be considered the other side of the DB coin. If pensions become deferred pay again, then large employers will not see the DB pension as offering an opportunity  for growth not just as capital for the business but as a P/L  enhancement to enhance staff to work harder and stay with the employer.

There is a feeling in this country that something is wrong and that we should return to a rather more optimistic view of our future. This view is of course wider than the narrow world of DB , DC and collective pensions but progressive employers looking to kickstart a new deal with staff could look at DB and collective pensions as relatively easy. The DB pension was for much of the first quarter of the century an albatross. For the next quarter of a century,  pensions need not be a drag but a means to accelerate growth. Where big companies can take a lead, small employers can follow