UK valuations are increasingly being used as a “strategic tool” in defined benefit (DB) pension scheme endgame planning, as most pension funds move into surplus, according to The Pensions Regulator (TPR).
TPR said valuations are no longer simply a mechanism for managing deficits, but are now helping trustees assess progress against long-term objectives and refine endgame strategies.
Its analysis shows aggregate funding reached 124% as at 31 December 2025, with around 10% of schemes still in deficit. On a buy-out basis, about 60% are in surplus.
Funding levels are expected to remain broadly stable into early 2026, although TPR warned that trade and geopolitical tensions have increased uncertainty around inflation, interest rates and growth, with market volatility rising.
Against this backdrop, TPR said valuations are taking on greater strategic importance. It also emphasised that statements of strategy should be “live” documents that evolve over time and guide the valuation process, rather than follow it.
Around 80% of pension funds are now estimated to meet Fast Track requirements, allowing for lighter regulatory scrutiny. TPR confirmed it is not changing Fast Track parameters, despite them being set in more favourable market conditions, including higher bond yields and stronger equity performance.
However, it said both Fast Track conditions and the definition of low-risk schemes remain under review, particularly for schemes with full buy-in arrangements. It added that any future changes will be made cautiously, given their potential impact on valuation approaches.
The regulator also plans to analyse 2025 valuation submissions to improve transparency and identify emerging risks across the sector.
It will also consult on more detailed surplus guidance to sit alongside final regulations, expected to come into force in 2027.
Laura McLaren, head of DB scheme actuary at Hymans Robertson, said the guidance reflects schemes still adapting to the new regime.
“Keeping Fast Track parameters unchanged provides welcome stability,” she noted, adding that the “objective first” approach to strategy remains key.
McLaren also said that the focus on endgame planning is “timely” given the new Pension Schemes Act, which lays the groundwork for surplus use.
Richard Soldan, partner and head of LCP’s DB funding group, agreed that valuations are becoming central to long-term strategy, but urged caution over future Fast Track changes.
He said: “Our recent experience of strong pricing in the insurance market indicates that the current Fast Track requirements for technical provisions and low dependency could already be close to buy-out levels in some cases, especially for more mature schemes.”
