Highlights from TPR’s latest DB data report

The Pensions Regulator (TPR) has unveiled its latest data on the state of DB schemes, confirming an improved funding position and the continued reduction in the number of funds.

Pensions Expert has delved into this week’s data report, based on 2023 scheme returns, to pick out some of the key figures.

Healthy funding

As other recent data has shown, DB schemes are overall in a healthy funding position.

• £1.42trn – total assets across all schemes in the regulator’s survey (excluding those in wind-up)

• £40bn – the aggregate surplus of open DB schemes on a technical provisions basis

• 114.5% - aggregate funding ratio on a technical provisions basis (excluding schemes in wind-up)

• 3,620 – number of schemes with funding level of 100% or more as of 31 March 2023, up from 2,565 a year earlier

• 35 – number of schemes with funding level of 60% or less as of 31 March 2023, down from 85 a year earlier

• £28bn – the aggregate deficit of schemes in deficit, less than half the level reported last year

Closing schemes

The regulator’s data show that 1.2m people are members of open DB schemes, equivalent to 13% of DB memberships covered. Of these, just over 444,000 were active members.

• 682,747 – total active memberships of DB schemes, down 59% since 2013

• 59% – proportion of DB memberships of schemes closed to future accrual

• 9.6m – total DB memberships in TPR’s dataset for 2023, down 1.9% from last year

• 24.2% - decline in total DB memberships in TPR’s dataset since 2013

Scheme status

A total of 5,297 schemes were covered by TPR’s latest report, down 2% from last year.

• 4% – proportion of private sector schemes still open to new members

• 21% – proportion of private sector schemes closed to new members (excluding hybrids)

• 71% – proportion of private sector schemes closed to future accruals (excluding hybrids)

• 4% – proportion of schemes in wind-up

What the experts said

Kunal Sood, managing director of DB solutions and reinsurance at Standard Life, said the data reflected the record levels of de-risking across the DB sector last year. More than £50bn worth of pension liabilities was transferred to insurers in 2023, according to the latest estimates.

“Many schemes will continue to focus on locking in their favourable positions and reducing risk,” Sood said. “Some schemes will also be looking towards the Budget next month, when changes that impact scheme surpluses may be announced.

“There is every expectation that the market will continue to evolve and push deal volumes up. While the industry is responding to this demand by scaling up operations and investing in people and technology, it remains vital for schemes to have done the necessary administrative and preparatory work ahead of approaching an insurer.”

Simon Kew, head of market engagement at Broadstone, agreed that the data indicated that “the insurance market will be intensely competitive in 2024 and, most likely, through the next couple of years”.

“Preparation, good scheme governance, excellent data standards and top-class administration will all be key to attracting and engaging insurers,” he said. “Meanwhile, for larger schemes with strong sponsors, run-on may be an increasingly attractive and appropriate option. This could drive significant economic benefits as the government looks to promote a new regime of productive finance and investment in UK assets.”

Laura McLaren, head of DB actuarial consulting at Hymans Robertson, said policymakers should “look properly at longer term pensions strategy” given the shrinking number of open DB schemes.

She added: “In the meantime, TPR and the Department for Work and Pensions are currently wrangling to make sure the final regulations and funding code are fit for purpose and proportionate given that there is now a very small, and reducing, number of poorly funded schemes.”