DB surpluses reach £220bn as industry awaits surplus access reforms, XPS analysis shows

DB surpluses reach £220bn as industry awaits surplus access reforms, XPS analysis shows

12 Feb 2026

UK defined benefit (DB) pension schemes continue to maintain strong funding positions, reaching £220bn at the end January 2026 relative to long-term targets, new analysis from XPS Group shows.

The figure represents an increase from £199bn at the same point last year, showing the steady improvement in scheme funding positions, amid intense industry focus on the long-anticipated reforms to surplus access.

According to XPS, total scheme assets stood at £1,180bn, compared with £960bn of liabilities on a long-term funding basis, resulting in a modest month-on-month improvement in overall funding levels.

The continued resilient funding levels experienced by many DB schemes further highlights the potential opportunities that could be unlocked once the much-awaited flexibilities around the use of surplus funds come into force. Consultation on regulations governing surplus release is expected this year, followed by regulatory guidance in late 2026 or early 2027.

Scheme assets remained broadly stable in January 2026. Small rises in gilt yields were largely offset by a slight increase in inflation expectations, leading to a marginal fall in the value of matching assets. Returns from growth assets contributed to a modest improvement in asset values overall.

Scheme liabilities edged down modestly over January 2026, as a small rise in gilt yields was largely offset by a slight increase in inflation expectations.

Jill Fletcher, Senior Consultant at XPS Group said: “Having the option to access surplus for well-funded schemes could be a positive step for Trustees, members and sponsors. As strong funding positions persist, some Trustees and sponsors will be keenly awaiting the regulations that will enable this, so that strategic plans to run-on their schemes whilst making use of these flexibilities can be put into action.”

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.