Defined Benefit Study
The Changing
Ecosystem of Defined Benefit Pensions
Identifying trends and priorities driving the UK institutional market
The Changing Ecosystem of Defined Benefit Pensions
With the landscape of DB pensions changing, it provides an opportune time to take stock of the market and the key priorities and concerns facing industry stakeholders.
We are therefore pleased to present the findings of Russell Investments’ UK Defined Benefit Market Insights study, a biannual series which will survey senior decision-makers to understand their current views and priorities.
In the latest volume of Defined Benefit Research, we share the changing attitudes of Defined Benefit (DB) pension schemes toward their end-game strategies. While the traditional path to buyout remains the default option, there is a subtle shift toward considering alternative approaches.
Key findings
Volume 5 – Autumn/Winter 2024
Risk management remains high on scheme agendas: focus on improving/maintaining funding levels (53% of schemes), managing market risk (44%) and derisking towards endgame (39%) are cited as the main priorities for respondents. Nearly a third of respondents also prioritise cashflow generation and increasing returns, representing a notable rise from prior surveys and reflecting greater interest in run on/off solutions.
Despite funding levels having improved significantly over the past couple of years, nearly a third of schemes have not yet decided on their endgame target. Buyout remains the preferred long-term objective but there has been a 33% increase in schemes looking to run on/off.
Environmental, social, governance (ESG) is a focus but not a priority in the lead-up to endgame. While better quality data on ESG remains a change nearly a third of schemes want, less than half plan to focus on climate risk in the next 12 months, down from 58% in the last survey
Regulatory burdens, including Pensions Dashboard challenges as well as the ramifications of the Virgin Media case, continue to concern trustees.
VOLUME 5 – AUTUMN/WINTER 2024
The Changing Ecosystem of Defined Benefit Pensions
Any opinion expressed is that of Russell Investments, is not a statement of fact, is subject to change and does not constitute investment advice.
The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.
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Simon Partridge
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