DB pension surpluses remain at record highs, up £65bn year-on-year, XPS analysis shows

DB pension surpluses remain at record highs, up £65bn year-on-year, XPS analysis shows

09 Dec 2025

• UK DB pension schemes continue to enjoy extremely positive funding positions, with XPS Group estimating aggregate surpluses of £252bn on long-term targets, up from £187bn the year prior.
•  Scheme assets dipped slightly over November 2025, as a modest rise in bond yields reduced the value of matching assets, and global equities delivered softer than expected returns.
• Liabilities also eased marginally, driven by a small rise in gilt yields.

New analysis from XPS Group shows that UK DB pension schemes maintained strong funding positions throughout November 2025, relative to long-term targets. Schemes held £1,215bn in assets (against £963bn in liabilities) marking only a slight month-on-month dip in funding levels.

The strong funding levels of many UK pension schemes were maintained through November in the lead up to the Autumn Budget. The Chancellor unveiled greater flexibilities taking effect from April 2027 with one-off payments to members from pension scheme surpluses no longer being treated as unauthorised. The reform gives trustees and employers further options to use surplus funds, and may allow members to share more directly in the benefits of stronger scheme funding.

Graham Robinson, Senior Consultant at XPS Group said: “With the continued high funding levels within DB pension schemes, the enhanced flexibility around surplus distribution announced in the recent Budget is welcome news to trustees and members alike. However, careful consideration of all stakeholders will be required when considering any surplus distribution from well-funded schemes.”

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 was 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.