Buyout No Longer Default for DB Pension Sponsors

More than nine in ten UK defined benefit (DB) pension scheme sponsors have either reviewed or are currently reviewing their long-term pension strategy, as improved funding and a wider range of long-term options prompt businesses to reconsider the future of their schemes.

The Pensions Balancing Act, a new report from Independent Governance Group (IGG), a leading provider of professional pensions trusteeship, governance and communication services, shows that two-thirds (66%) of DB sponsors have already reviewed their long-term strategy in response to improved funding or endgame options. A further 27% are currently undertaking a review.

The study, based on a survey of UK CEOs, CFOs and senior pension decision-makers, suggests that while buyout remains an important potential destination for DB schemes, sponsors are increasingly considering different routes and timings to reach their long-term objectives.

Just one in ten (10%) DB sponsors say their current strategy is to buy out with an insurer as soon as practical. By comparison, 15% are considering running their scheme on in some form, although more than half of this group still expect ultimately to pursue buyout.

Captive or in-house insurance solutions, external capital-backed solutions, and consolidators, superfunds or alternative risk-transfer solutions were also prominently cited as alternatives to the traditional buyout route by senior corporate decision-makers. However, one in 20 (5%) remain undecided on which path to take.

Hatty Goodwin, Trustee Director and Head of Risk Transfer at IGG, commented:

“As funding conditions have improved, sponsors and trustees have more credible options available to them and are rightly testing the market to find which best fits their scheme, their obligations and their objectives.

“But the debate should not be framed as simply buyout versus run-on. The focus is now also on timeframe. Run-on strategies can be used in the short, medium and long term to achieve better outcomes for members and sponsors. The insurance market remains a secure route to remove risks off the balance sheet when the time is right.”

Improved funding changes perceptions

The reconsideration of long-term strategy also reflects a shifting view of DB schemes. Four in ten corporate decision-makers (40%) now see their scheme as a potential source of future value if well-funded, almost twice the number (22%) who primarily regard it as a financial risk to be removed from the balance sheet.

The research also points to the importance sponsors place on governance as strategic choices increase. For instance, stronger alignment between sponsors and trustees was the most commonly requested support for confident long-term pension decision-making, identified by 34% of respondents.

David Farmer, Trustee Director and Head of Strategic Pension Solutions at IGG, added:

“Crucially, the support sponsors most want is not more modelling or more advice, but better alignment with their trustees. Every route – buyout, run-on, capital-backed, consolidation – depends on sponsor and trustee agreeing what good looks like before they commit. Delaying this dialogue risks turning a genuine appraisal of the options into a defensive negotiation. True alignment must be built collaboratively to produce the best answer for members and the business.”

Read the full report to explore the findings in detail.

Methodology: IGG commissioned Censuswide to survey 100 UK CEOs, CFOs and pension decision-makers to assess their views, experience and strategies with regards to their current pension schemes. The data was collected between July 3^rd and July 7^th, 2026. DB-specific findings are based on the 73 respondents whose organisations are the sponsors of DB schemes. Censuswide is a member of the Market Research Society (MRS) and the British Polling Council (BPC), and a signatory of the Global Data Quality Pledge. It adheres to the MRS Code of Conduct and ESOMAR principles.

Key Contact