Is Buy-Out Still the Default Endgame for DB Pension Schemes?

When talking about DB pension scheme endgame options in the UK, there has up to now only been one option - securing a buy-out with an insurer. While this remains a viable and often appropriate option, regulation changes are opening the door to alternative, non-insurer-led strategies.  

How recent regulatory developments are changing surplus access 

• Surplus extraction allowance - UK regulation changes are set to unlock billions of pounds currently being held as surplus of DB pensions schemes. The means extracted surplus can be funded to members, sponsors or both, making it of high interest to all stakeholders. 
• Captive insurance frameworks – while this endgame option has previously been seen as a route for a select few pension schemes in the UK, interest in surplus extraction is making this a viable option to be considered more widely than before as it is a more secure way of accessing surplus than just pure run-on. 

Growing interest in alternative endgame strategies

For a pension scheme in the UK, there is no longer one obvious endgame option, and the developments discussed above have opened the door to a number of options. 

For the DB pension schemes that find themselves falling short in respect to their funding position (relative to buy-in) and being unlikely to make up the deficit, the endgame options may be limited. However, DB Superfunds can offer an alternative bridge option for these schemes to ultimately achieve buy-out. 

Why buy-out is no longer automatically the “right” answer

With these new endgame options available, the DB endgame is no longer one-size-fits-all. Trustees and sponsors now have additional considerations to take into account when choosing their pension schemes endgame:

• Accessing surplus - As of early 2026, there is around £260 billion* in surplus that is, under the “classic” route, being handed over to insurers as part of a buy-out transaction.  
• Maintaining control – There are now endgame options offering the ability to maintain relationships between Trustees/sponsors and members of a scheme.  

Trustees and sponsors need to weigh each option carefully, balancing member security against economic value, while keeping a close eye on long-term consequences, particularly the irreversible nature of a buy-in or buy-out. 

A key part of this evaluation is to understand the risks, both upside and downside, which a capable stochastic ALM tool will be able to do.  

Download the whitepaper for a full comparison of endgame options where we evaluate the options using GLASS. 

This article is the first in our series on rethinking the endgame for UK defined benefit pension schemes, with further insights to follow in the coming weeks.

*Taken as at February 2026, measured on a S179 basis. 
^{Source: https://www.ppf.co.uk/ppf-7800-index}