L&G Endgame Insights: Over half of UK DB pension schemes considering surplus extraction during run-on or at buyout

• Latest report revealed that enhancing DB member benefits was an overall top priority for trustees
• 57% of schemes now considering surplus extraction – whether during run-on, at the point of buyout, or in the years leading up to it
• 24 pension schemes that L&G moved to buyout in 2025 used surplus to enhance their members’ benefits

The research shows that a clear majority of schemes expect insurance to play a central role in their de-risking journey. It also reveals a notable proportion exploring run-on approaches, either as a long-term strategy or for a period before securing their members’ benefits with an insurer. Reflecting this shift, 57% of schemes surveyed are now actively considering surplus extraction – whether during run-on, at the point of buyout, or in the years leading up to it. This is consistent with L&G’s practical experience, where 24 pension schemes that it moved to buyout in 2025 used surplus to enhance their members’ benefits.

Endgame planning at the top of the agenda 

Over the past year, trustees and corporate sponsors have been navigating one of the most significant shifts in endgame planning, shaped by rising funding levels, regulatory reform and a widening set of strategic options. The survey results underline how the landscape is shifting, with almost half of schemes surveyed (49%) now fully funded on a buyout basis, placing endgame planning at the top of the agenda.  
 
The government is making it easier for well-funded DB schemes to release surplus when ‘safe to do so’, underpinned by its intention to unlock some of the £135bn of surplus funds (on a low dependency basis, as of 31 December 2024) for reinvestment into the UK economy. 
 
Against this backdrop, the survey revealed that among trustees considering surplus extraction, preferences for how that extracted surplus was used, were mixed across the cross section of different trustees. Survey respondents ranked enhancing DB member benefits as a top priority, followed closely by supporting a DC scheme or returning surplus to the sponsor, with investing in UK assets as the lowest priority.  

The report highlights that the UK PRT market delivered a record number of transactions in 2025, with insurers securing around £40 billion of members’ benefits across more than 350 transactions, continuing a four-year run of increasing transaction activity. It also considers how trustees and sponsors are increasingly taking advantage of attractive insurer pricing to recognise surplus at buyout and deliver meaningful benefit enhancements for members.The report also looks at how non-pricing factors are becoming increasingly important in insurer selection decisions, highlighting the importance of insurer financial strength, a high‑quality member experience and the credibility of a recognised brand with a strong track record in the market. 

L&G’s survey findings also suggest a renewed confidence that smaller schemes will be a significant part of buy-in and buyout transaction volumes going forward, with 84% of respondents agreeing that being a smaller scheme would not inhibit their ability to transact. The survey also revealed progress on the expected time between a buy-in and buyout. 34% of respondents who had already completed a buy in said they expect to move to buyout within the next two years, and a further 41% plan to do so within three to five years. 

The endgame landscape continues to evolve 

Regulatory developments, including expected changes that could make superfund transfers more accessible, are increasing the range of options available to schemes. While additional choice is positive, the report demonstrates the need for greater understanding of member security, risk, and governance differences between models such as run-on, superfunds, and buyout. This is paramount for trustees determining the most suitable path for their scheme.

The report concludes that in order for schemes to secure their members’ benefits with an insurer, thorough preparation – including robust governance and early, proactive engagement – will be key in making sure schemes are in the strongest position possible to achieve the best outcomes for their members.