DB pensions are “more resilient, more flexible and more policy-driven than at any point this century”, according to the Society of Pension Professionals (SPP).
The organisation has today published a comprehensive analysis of the DB investment ecosystem in the UK.
It concludes that the ecosystem in 2026 is probably more resilient than at any time in the present century.
The paper offers reflections on SPP’s Vision 2030 paper, an analysis of DB investment developments, trends and their likely impact.
It covers issues including surplus release, run-on strategies and insurer capacity as well as LGPS reform, the new funding regime and the strength of the PPF.
It acknowledges that resilience has materially strengthened: “Leveraged LDI strategies have been recalibrated, interest-rate buffers doubled and governance tightened. Most schemes are now well hedged for interest rate and inflation risk, with longevity risk the main remaining exposure.”
The paper also highlights that market dynamics are shifting, “notably through quantitative tightening, record levels of gilt issuance, and changing gilt maturity profiles” and while contractual assets remain central to DB investment strategies, “the relative attractiveness of corporate bonds and other credit assets has declined.”
On superfunds, the SPP paper states: “Early Superfund transactions demonstrate potential benefits for members, although the market remains small and dependent on proportionate regulation.”
Steve Hitchiner, chair of the SPP’s Future DB Vision Working Group, said: “To ensure the best possible outcomes for all, schemes and regulators will need to harness the various reforms that are taking place, while managing the systemic risks that accompany them - especially in a world of higher yields, growing public debt and evolving consolidation models.”
The SPP is the representative body for a wide range of providers of advice and services to pension schemes, trustees and employers. Its members include actuaries, lawyers, professional trustees, DC consultants, investment managers, providers, administrators, covenant assessors, and other pension specialists, delivering a range of services.