DB pension surpluses up £26bn in the last year, XPS analysis finds

DB pension surpluses up £26bn in the last year, XPS analysis finds

07 Jul 2025

• XPS Group estimates that the aggregate surplus of UK pension schemes against long-term funding targets remains extremely positive at ~£189bn, a fall of £2bn compared to the end of last month, up £26bn versus the end of June 2024.
• Aggregate scheme assets marginally increased over June 2025, as growth assets experienced positive returns, along with matching assets increasing in line with liabilities. 
• Aggregate scheme liabilities increased slightly, driven by decreases in gilt yields.

Since June 2024, UK pension schemes’ funding positions improved compared to long-term funding targets, according to new analysis from XPS Group. With assets totalling £1,151bn and liabilities of £962bn, the aggregate funding level of UK pension schemes (on a long-term funding target basis) remains extremely positive, at 120% of the long-term value of liabilities. This represents an increase of 4% over the past year, as of 30 June 2025.

Funding levels of UK DB pension schemes stayed strong over June 2025. This comes as Trustees and Employers unpack major announcements, including the Pension Schemes Bill, the Government’s response to the DWP consultation on “Options for Defined Benefit Schemes”, and guidance from the Pensions Regulator on endgame options.

Trustees and Employers are now revisiting their long-term objectives and assessing what opportunities are available to them to improve outcomes for all stakeholders, as they plan how to reach their chosen endgame. For example, a recent XPS Group poll found that 76% of trustees are more likely to adopt the new statutory override to give themselves the power to distribute surplus.

Jill Fletcher, Senior Consultant at XPS Group said: “Many DB schemes are now fully funded on or above their long-term funding basis and are considering their objectives and strategy for reaching that endgame. While for some schemes the objective will continue to be working towards insuring benefits through buy-in or buy-out, the potential to run-on a scheme and make use of the recently announced surplus flexibilities may now be a more attractive and feasible option for others.”

Notes:

XPS DB:UK tracks the funding position of UK defined benefit (DB) pension schemes on long-term funding target and buyout bases, enabling trustees and corporate sponsors to see how their scheme’s funding compares to the wider pensions landscape. The model has been refreshed and relaunched in July 2025 to take account of published information from the Pensions Regulator and Pensions Protection Fund and insight from XPS’s market-leading Member Analytics and the XPS Data Pool.

XPS DB:UK Funding Watch monitors the combined deficit and funding level of UK defined benefit (DB) pension schemes (i.e. all registrable schemes - including hybrids) on a long-term target basis (using a discount rate of Gilts +0.5%) and XPS’s in-house buyout basis. It combines XPS’s market leading Member Analytics and the XPS Data Pool with the award-winning journey planning tool, Radar, enabling real time monitoring of changes and analysis of the reasons behind any movement.

An online version of XPS DB:UK is available here:

https://www.xpsgroup.com/what-we-do/technology-and-trackers/xps-dbuk-tracker/