2030 vision: where will the pensions sector be in five years?

As part of our 2025 Pensions Week, our session ‘2030 vision: where will the pensions sector be in five years?’ chaired by Ian Bell, set the scene for the week ahead and opened discussions on the future of the private sector defined benefit (DB) market by drawing on insights from panellists including Morton Nielsen, CEO at Brightwell, Matt Wilmington, Chief Transactions Officer at Clara Pensions, and Lara Desay, Partner and Head of Risk Transfer Solutions at Hymans Robertson.

During the debate, which covered topics including the evolving risk transfer market, the role of longevity swaps and the emergence of super funds, the panel highlighted the significant improvements in scheme funding ratios, driven by changes in gilt yields since the end of 2022. This has led many trustees to consider risk transfer options for their scheme liabilities to the insurance market. The session also discussed upcoming changes to the pension landscape, including the new DB funding code, the Mansion House reforms and the potential for a pensions bill later this year.

Key takeaways from the session

Improved funding ratios: the increase in gilt yields has accelerated the move towards a surplus position for many DB schemes, with the panel noting many trustees are now considering risk transfer options, such as long-term run-on strategies, buyouts and super funds.

The Pensions Regulator’s DB funding code: the panel discussed the implications of the new code and highlighted that schemes now need to establish long-term funding and investment plans with a set end goal.

Mansion House reforms: these reforms, along with the prospect of a pensions bill, indicate that more regulations and guidance are likely.

Longevity swaps: Longevity swaps were highlighted by the panel as an increasingly important tool for schemes considering a run-on strategy to manage funding volatility.

The emergence of super funds: the panel discussed the growing feasibility of super funds as a new option for trustees and sponsors looking to pass on their liabilities at a potentially lower cost.

Emphasis on member security and effective communication: with changes in regulation and reforms coming quickly, the panel noted that clear and consistent communications between trustees and sponsors is key.

Clarity in regulations: finally, the panel highlighted the need for effective communications between regulators and providers with a flurry of reforms and tax changes fuelling uncertainty.

What is the outlook for the UK pensions sector?

The evolving landscape of the UK pensions sector will continue to present both opportunities and challenges for pension providers in the coming year. Driven by improved funding ratios and evolving regulations, more trustees are considering risk transfer options, and face balancing the need for member security with the desire for cost efficiency.

However, challenges including funding volatility and compliance with new regulations mean trustees and sponsors will need to continue to act with agility to ensure the long-term sustainability of their pension schemes.