Defined benefit (DB) pension schemes have taken advantage of last year’s “relative calm” to make progress on endgame planning, net-zero targets, and tackling diversity, equity and inclusion (DE&I) issues, research from LCP has revealed.

LCP’s latest Chart Your Own Course report found that many schemes have seen improvements to their funding positions and are exploring various endgame options.

In particular, LCP found that completing a de-risking transaction remained a top priority for many, cited as a key priority in the coming year by 25 per cent of respondents, as trustees see their timelines to full insurance transactions continuing to shrink.

Indeed, LCP found that target timelines of 3 years or less are becoming increasingly common, while the proportion of DB schemes expecting their final full insurance transaction to be more than 10 years away has fallen “sharply”.

However, the report revealed that self-sufficiency or active run-on are becoming more popular among smaller and medium-sized schemes, with more than half (57 per cent) of schemes between £500m and £1bn targeting run-on or self-sufficiency for their long-term objective, up from 33 per cent in 2023.

The report also found that large schemes led the way on DE&I, with almost 80 per cent of schemes over £5bn taking steps concerning DE&I issues.

Overall, LCP found that around 50 per cent of initiatives of all sizes, including those under £500m, have also taken steps in relation to DEI issues, although a “significant minority” of around 30 per cent support DE&I but have not yet taken action.

A similar trend was seen in terms of net-zero targets, as LCP found that 90 per cent of schemes over £5bn now have a net-zero target or are working through the practicalities.

A “significant” proportion of medium and smaller schemes were also taking steps to reach net zero, however, with over 60 per cent of schemes in the £500m-£1bn range and almost 40 per cent of schemes below £500m on the path to net-zero.

LCP urged schemes to maintain this momentum by continuing to be “proactive” in agreeing on endgame targets and timescales and managing journeys to get there by “tackling” systemic risks such as climate risk.

Commenting on the report, LCP partner, Jon Forsyth, said: “After years of mixed outcomes for DB pensions, the recent year has brought about a notable shift in a positive direction for most of these schemes.

“Funding positions have shown continuous signs of improvement, pointing towards a more secure financial standing.

“Against this backdrop, our survey results show that lots of schemes have taken proactive measures in various key areas, including endgame strategies, climate risk, and addressing DE&I issues.”

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