DB Schemes to set endgame vision at valuation

Defined benefit pension schemes are entering a new era which is shifting their focus from managing deficits to long-term strategy, according to the latest paper from Hymans Robertson. Under the new DB Funding Code, aligning funding and investment decisions with a clear endgame plan is now a regulatory requirement. The leading pensions and financial services consultancy says trustees and sponsors should take the time to discuss and agree their long-term strategy, setting the course for the next valuation.  

The paper highlights a fundamental shift. For the first time, schemes must formally document their endgame and demonstrate how funding and investment strategies support it as part of their next valuation. Allowing sufficient time for all parties to engage in these discussions will make valuations more purposeful, enabling them to build a future-ready strategy that meets both compliance requirements and reflects their long-term ambitions.

Commenting on the shift, Laura McLaren, Partner and Head of DB Scheme Actuary Services, said:

“We’re seeing a big shift in how schemes approach long-term planning. Amidst an expanding range of endgame options, the new funding code has raised the bar, encouraging trustees and employers to engage meaningfully on these issues. 

“More schemes are exploring run-on strategies and surplus sharing. With potential surplus release likely to be linked to low dependency, schemes will want to avoid locking into unduly restrictive paths or defaulting to fast track compliance. The ability to adopt flexible assumptions; including dynamic rates, better alignment with assets, and tailoring expense reserves, means schemes with clarity on their endgame can build plans that reflect their true ambitions.

“A clear endgame, whether buy-out, run-on or consolidation, sets direction and informs funding, investment and planning. This is about more than meeting regulatory requirements. It’s about unlocking long-term value and ensuring valuation decisions support, rather than constrain, long term strategy. Sponsors and trustees who engage early and plan with clarity will be best placed to navigate the new landscape and make the most of the options now available.”

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