FTSE350 pensions – Covid-19 delays the endgame

"Understandably, DB funding has not been top of the agenda in recent months. However, with the peak of the crisis hopefully now behind us, companies should be assessing the damage and taking a renewed look at their funding plans."

In this analysis of the FTSE350 companies with defined benefit (DB) pension schemes, we take a look at how the economic turmoil of Covid-19 has impacted the path to endgame.

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Key findings 

At the end of June, around 55% of FTSE350 DB schemes were in a position to buyout within 10 years, down from 65% at the start of the year

On average, the Covid-19 market crash has pushed back the FTSE350 DB scheme endgame by around a year and a half

At the end of June, our calculations suggest that around 78% of FTSE350 DB schemes were in a position to transfer to a superfund within 10 years

DB endgame hits choppy waters

While some schemes will have weathered the recent market volatility relatively unscathed, funding levels for many schemes will have worsened. Coupled with the difficulties facing UK business, reaching the DB endgame will now be a greater challenge for a lot of schemes.

Navigating back on course 

At the beginning of the year, nobody could have predicted the extraordinary events that we have seen. With the result of TPR’s review of the DB funding regime on the horizon, companies and trustees will need to carefully review their funding plans and decide how these fit into the picture of an economy in recovery. 

Our DB Navigator framework can help companies and trustees chart the DB endgame journey. 

Please contact Simon Taylor if you would like to discuss any of the above topics in more detail.