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DB Endgame

Everything you need to know about endgame planning and implementation for trustees and sponsors of defined benefit (DB) pension schemes.

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What is DB Endgame?

A DB endgame is the long-term strategy for bringing a Defined Benefit (DB) pension scheme to its final stage, where all member promises are secured, and risks are minimised or transferred.

In other words, it’s how a company’s pension scheme reaches the point where its obligations are effectively managed or settled for good.

DB pension schemes in numbers

Smaller schemes are those with an asset size of less than £100 million.

68

of the DB market is made up of smaller schemes.

43

number of smaller scheme transactions in 2020.

62

number of smaller scheme transactions in 2024.

Examples of DB pension schemes

Several well-known UK organisations operate or have operated Defined Benefit (DB) pension schemes, many of which are large, public, or have been in the news for their endgame planning.

BT Pension Scheme

One of the UK’s largest private sector DB schemes, covering current and former employees of BT Group. It has been moving steadily towards full funding and long-term endgame readiness, with assets of over £35 billion.

Royal Mail Pension Plan

The historic DB plan was largely taken over by the government in 2012, with existing benefits backed by the state. Royal Mail has since developed a new Collective Defined Contribution (CDC) scheme for future accruals.

BBC Pension Scheme

A large DB scheme for BBC employees, closed to new members in 2010. The BBC has been actively managing funding levels and risk in preparation for its eventual endgame strategy.

Why endgame planning

For a DB pension scheme, where benefits are defined by formula and promised in advance rather than contributions, the ‘endgame’ is the strategy to secure scheme liabilities.

Several recent changes have put DB endgame strategies firmly on the agenda for many trustees and sponsoring employers:

  • Funding levels for many DB schemes have improved in recent years (e.g., rising gilt yields, changes in actuarial assumptions), making some schemes closer to “buy-out” than before.
  • The regulatory and legislative environment in the UK is evolving. For example, The Pensions Regulator (TPR) has updated guidance on endgame options, and the government is consulting on surplus extraction and other reforms.
  • For trustees and employers, defining an endgame strategy is now more urgent.
  • Growth in endgame options has made planning crucial to ensure opportunities are not missed. 
Start planning your endgame with clarity

What are your endgame options?

Because the stakes, including member benefits, employer covenant, risk, cost, and regulatory compliance, are high, having a clear endgame strategy helps trustees and sponsors make informed decisions. Typical endgame routes include:

Option 1

Run-on

The pension scheme continues to operate rather than immediately transferring its liabilities to an insurer.

    The scheme remains under the control of its trustees and sponsoring employer.
    Investments are managed with the goal of paying pensions directly from scheme assets over time.
    Some schemes choose to “run on” because they are well-funded and can afford to invest for growth or surplus rather than paying the high cost of an insurance buy-out now.
    It offers flexibility but retains investment and longevity risk.
Explore Run-On

Option 2

Operational Consolidation

This route focuses on sharing services and governance, not transferring liabilities.

    Schemes join a master trust platform or outsourced management structure that centralises investment, administration, and governance.
    The liabilities and legal responsibility still stay with the original employer, but efficiency and expertise improve.
    It’s a way to reduce running costs and administrative complexity while maintaining scheme ownership.
Explore Consolidation

Option 3

Risk transfer or “buyout”

A buy-out (or buy-in) transfers the pension liabilities to an insurance company.

    The insurer receives a premium (usually funded by scheme assets) and takes over responsibility for paying pensions.
    Buy-in: The insurer issues a policy to the trustees, who remain responsible to members.
    Buy-out: The insurer issues individual policies to members, fully discharging the scheme’s liabilities.
    It’s considered the “gold standard” endgame because it provides the highest level of member security, but it’s also the most expensive option.
Explore Risk Transfer

Option 4

Settlement consolidation

The historic DB plan was largely taken over by the government in 2012, with existing benefits backed by the state. Royal Mail has since developed a new Collective Defined Contribution (CDC) scheme for future accruals.

    These vehicles pool several schemes together, achieving economies of scale and professional management.
    The superfund (not the employer) takes over responsibility for paying members’ benefits.
    It offers more security than running on alone (since it’s capital-buffered) but typically less security than a full insurance buy-out.
    It can be a stepping-stone between run-on and buy-out for schemes not quite ready for full insurance transfer.
Explore Settlement Consolidation

Explore your scheme options with our endgame tool

The endgame tool is designed to be used by trustees or sponsors of private sector Defined Benefit pension schemes in the UK.

This tool will assist you in starting your journey to develop, monitor and update your endgame strategy. In order to get the most from the tool we recommend having the following latest documents to hand:

  • Trustees Report & Accounts
  • Triennial Funding Valuation report
  • Funding Update
  • Administration Update Report
  • Statement of Investment Principles
  • Scheme Return submitted on the Pension Regulator’s Exchange site

You will not be asked to enter any scheme-specific figures. Your Endgame Indications Reports will highlight the key considerations and rank potential endgame options to explore and avoid.

Review, develop and update your endgame strategy today

What impacts your endgame?

When deciding which endgame route to pursue, schemes typically assess a variety of factors:

Flexibility and timing

Sometimes schemes will initially run-on with the intention to buy-out later, depending on how markets move, regulations evolve, or the scheme’s position improves.

Sponsor covenant

The financial strength and long-term commitment of the sponsoring employer matters (especially for run-on strategies).

Liquidity and cost

Insurance buy-out often requires a large one-off premium; run-on means ongoing costs, investment risk, and governance burden

Scheme funding position

How well funded is the scheme on a buy-out basis (i.e., if you transferred liabilities to an insurer)? If you’re very well funded, buy-out becomes more feasible.

Governance and risk transfer

For buy-out or superfunds, you transfer many risks (investment, longevity) to another party. With run-on, you retain them.

Member outcomes and benefits security

Supreme security for members is often via buy-out, but other routes may allow more flexibility (e.g., benefit enhancements and surplus sharing) depending on rules and sponsor.

Assess your endgame position

When and how to review your endgame?

The Pensions Regulator expects trustees to ‘regularly review’ their endgame strategy. Although no fixed schedule is stipulated, trustees are expected to initiate a review when triggered by material changes. An endgame strategy review could sensibly be completed in line with other statutory review tasks, such as the funding and investment strategy.

During trustee meetings

This is a good opportunity for employers and advisors to contribute to the discussion. Put the endgame review at the top of the agenda so outcomes inform the investment and funding items that follow.

Alongside triennial valuations

The valuation results provide strong evidence of the funding position of the scheme. This will impact what endgame strategies are accessible now and what actions should be taken to reach a funding position that supports the ultimate endgame objective.

Following material change

Unforeseen circumstances that impact the scheme’s ability to achieve its endgame objective should trigger a review. Some schemes have the technology to monitor their funding position and the market on a daily basis, allowing them to take action should any opportunities or threats present themselves.

Start your endgame review

Why schemes choose us

It’s best to review the endgame strategy when certain conditions are met. For example, when you have accurate, up-to-date funding information to support informed decision-making, or when all key stakeholders are available to have a thorough discussion about the future objectives of the scheme.

And this is where Spence & Partners comes in. As experienced pension consultants, actuaries and administrators, we combine technical insight, project management expertise, and strong market relationships to help schemes reach their chosen endgame with confidence and control.

Strategy and project delivery

Know where you want to go, and why. A clear strategy builds a robust plan. We’ll drive and monitor that plan of action, ensuring every step moves your scheme closer to its endgame objectives.

Scheme readiness and data quality

Quality data and a clean benefit specification open up wider endgame opportunities and improve your negotiating power. Our specialist data team, which is one of the strongest in the UK, ensures your scheme data is transaction-ready.

Negotiation and market access

Specialist involvement early in the process improves your chances of success. Our established relationships with insurers and consolidators mean we can help you navigate transactions smoothly and secure the best possible outcome.

Turn your endgame strategy into action

Meet our endgame team

Let’s talk endgame

Every scheme’s journey to endgame is different, and so is the support it needs.

Whether you are defining your strategy, preparing your data, or approaching transaction readiness, our specialists can guide you every step of the way.

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