Geopolitical and policy uncertainty was a major driver of profit warnings from UK-listed companies with defined benefit (DB) pension schemes in 2025, according to new research by EY-Parthenon.
Of 63 warnings issued by DB sponsors last year, 42% cited policy change or geopolitical disruption. EY said this was the highest level seen in its 25 years of tracking the data.
Although the total number of warnings from DB sponsors fell to 63 in 2025, down 21% from 80 in 2024 and the lowest annual total since 2021, more than a quarter (27%) of UK-listed companies with a DB scheme have issued at least one profit warning in the past 12 months.
Across the wider market, 240 profit warnings were issued by UK-listed companies in 2025, with DB sponsors accounting for 26% of the total.
Contract and order cancellations or delays were the other main driver of warnings among DB sponsors, referenced in 31% of cases.
“Trustees and companies will need to be adaptable, supporting funding discussions for schemes in deficit, while carefully assessing options for surplus release where schemes are well-funded.”
Paul Kitson, EY
Karina Brookes, UK pensions covenant advisory leader and EY-Parthenon partner, said that while the volume of profit warnings may have eased, this feels more like an uneasy pause than a turning point.
She explained: “The latest data continues to highlight the challenges and unprecedented impact that policy and geopolitical uncertainty are creating for sponsors and schemes.
“The debate around [the] use of surplus in pension schemes is ongoing, even ahead of the new legislation easing restrictions on surpluses coming into effect, which may help to alleviate other cash flow pressures.”
Trustees and sponsors should ‘remain vigilant’
Brookes warned that in this environment, open and transparent communication between sponsors and trustees should help trustees to find the right balance between protecting members and supporting sponsor objectives.
Paul Kitson, UK pensions consulting leader at EY, added that the reduced volume of total warnings in 2025 from companies with DB sponsors, alongside generally strong funding levels across many schemes, will provide some reassurance to both trustees and sponsors.
However, he cautioned that the growing impact of geopolitical turbulence means they must remain vigilant.
He said: “Sponsor covenant continues to be a key focus. Trustees and companies will need to be adaptable, supporting funding discussions for schemes in deficit, while carefully assessing options for surplus release where schemes are well-funded.
“For many organisations, the challenge now is forging resilient, long-term pension strategies that reflect business and member needs in the current operating environment.”
While EY’s analysis focuses on the 2025 calendar year, its publication comes amid major military activity in the Middle East that has hit some markets today. The FTSE All Share is down 1.22% today, and the FTSE All World index has fallen by 0.7%. Meanwhile, the S&P 500 is broadly flat.
Pensions Expert’s analysis of 47 DB schemes sponsored by FTSE 350-listed companies found the majority (72%) to be in surplus. The aggregate funding level of the schemes analysed was 111%, but actual funding levels ranged from 91% to more than 160%.
Additional reporting by Nick Reeve
