UK defined benefit (DB) funding levels remained strong through the first quarter of 2026, with an aggregate surplus of £210bn at the end of March 2026 compared to £165bn at the same point last year, according to PwC’s Low Resilience Index.

At the end of March, DB schemes held assets totalling £1,130bn against liabilities of £920bn on a low dependency measure, despite continued market volatility.

PwC’s Buyout Index showed that DB schemes were an estimated 114 per cent funded on a buyout basis, equivalent to a £140bn surplus.

PwC pensions partner, Saye Mkangama, 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.”

The reforms set out in the Pension Schemes Bill would allow well‑funded DB schemes to access surplus funds, when safe to do so, widening the choices available to trustees.

“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,” added Mkangama.

“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 is now broadly in line with low dependency funding, 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 indices measured the aggregate funding position of the UK's DB schemes.

The Buyout Index reflected PwC’s view of indicative market pricing based on their current experience of completing buy-in and buy-out transactions.

This article was first published on our sister website, Pensions Age.

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