The Pensions Regulator’s 2026 Annual Funding Statement: what ‘endgame planning’ means for DB members

Educational, not advice. This article explains what the Pensions Regulator’s 2026 Annual Funding Statement says and what its main themes mean for defined benefit (DB) pension scheme members. It does not recommend any course of action, and Pension Plain is not authorised or regulated by the Financial Conduct Authority.

Scope: This piece covers the Pensions Regulator’s (TPR) Annual Funding Statement published on 6 May 2026, the funding picture it describes for UK private sector defined benefit pension schemes, and how the new emphasis on endgame planning (buy-out, run-on, and superfunds) can affect deferred and active members. It does not cover the LGPS or other public sector pensions in detail (those are funded under their own valuation cycles); it does not provide investment guidance on surplus release; and it does not analyse the politics of the Pension Schemes Act 2026 surplus regulations, which remain in consultation.

In short

TPR published its 2026 Annual Funding Statement on 6 May 2026. It covers DB scheme valuations dated between 22 September 2025 and 21 September 2026 (the “Tranche 25/26” valuation cycle).
The headline: about 90% of DB schemes are now in surplus on a technical provisions basis, 80% on a low-dependency basis, and 60% on a buy-out basis. The aggregate funding level was 124% at 31 December 2025.
TPR is shifting tone away from deficit recovery and toward “endgame planning,” meaning trustees and sponsors are expected to set out clearly whether they intend to run the scheme on, buy it out with an insurer, or consolidate it into a superfund.
For members, none of this changes the benefits you are entitled to under your scheme rules. What it can affect is who pays your pension in the long run (your trustees, an insurer, or a consolidator) and the level of additional protection sitting behind your pension.
A separate DWP consultation on surplus-release regulations under the Pension Schemes Act 2026 is expected later in 2026; the final rules are not in force yet.

What the Annual Funding Statement is

The Pensions Regulator publishes an Annual Funding Statement (AFS) each spring. It is aimed at the trustees, sponsors, and advisers of UK private sector defined benefit pension schemes, but the headlines are reported widely and the underlying numbers shape pension scheme strategy for the year ahead.

The 2026 statement was issued on 6 May 2026 and covers schemes with effective valuation dates in the year from 22 September 2025 to 21 September 2026 (TPR calls this “Tranche 25/26”). Schemes carry out a full actuarial valuation every three years, so the schemes in any given tranche are the ones whose triennial cycle lands within that window.

Although the AFS targets trustees and sponsors, its substance matters to members because it describes the financial state of the schemes that pay their pensions and signals how regulators expect trustees to handle that money.

The 2026 funding picture in plain English

The 2026 AFS describes a private sector DB universe that is, on average, in significantly better financial health than at any point in recent memory. TPR reports an aggregate funding level of 124% at 31 December 2025 and gives three different measures of how many schemes are in surplus.

Technical provisions: about 90% of schemes in surplus

Technical provisions are the amount of money the scheme actuary calculates is needed today, given assumptions about investment returns, inflation, and longevity, to meet all the future pension payments the scheme has promised. About 90% of UK DB schemes are currently holding more in assets than their technical provisions liability.

Low dependency: about 80% of schemes in surplus

Under the funding code that came into force in April 2024, schemes are expected, in the long run, to reach a state of “low dependency” on the sponsoring employer. Roughly, this means the scheme can pay all expected benefits without needing further contributions, with assets invested in a way that produces relatively stable cash flows. About 80% of schemes are already at or above that level.

Buy-out: about 60% of schemes in surplus

Buy-out is the most expensive funding measure because it asks: if we transferred every promised pension to an insurance company today, how much would we need to pay them? Insurance pricing is conservative because the insurer takes on the risk for life. About 60% of UK DB schemes now hold enough assets to fund a full buy-out.

Put together, these three numbers say something simple: most private sector DB schemes are no longer trying to climb out of a hole. They are deciding what to do with a surplus, and the regulator wants them to be clear about that plan.

What “endgame planning” actually means

“Endgame” is industry shorthand for “what we intend to do with this scheme over the long term.” TPR’s 2026 AFS makes endgame planning the central theme. Trustees and sponsors are expected to choose, and document, one of three broad routes.

Run on

The scheme continues to be run by its own trustees, with the sponsoring employer standing behind it, possibly for decades. The trustees invest the assets conservatively and pay pensions as they fall due. If a meaningful surplus builds up, the new rules (once finalised) may allow part of it to be released to the sponsor, the members, or both, subject to safeguards.

Buy-out with an insurer

The trustees transfer the scheme’s liabilities (and a corresponding pool of assets) to a regulated insurance company. From that point, the insurer pays your pension. Buy-out is essentially the wind-up route: once it is done, the original scheme ceases to exist and the insurer becomes responsible for the promises.

Consolidation into a superfund

A “superfund” is a commercial DB consolidator that takes over several smaller schemes and runs them together at lower cost. It is a relatively new option and there are not yet many of them, but TPR has been working on an authorisation regime to make consolidation safer and more widely available.

Each route changes the answer to one question that matters to members: in 20 or 30 years’ time, who will actually be writing your pension cheque?

What this means if you are a member of a DB scheme

The first and most important point is that the benefits you have built up are defined by your scheme rules, and those rules do not change when the trustees pick an endgame route. A pension of, say, half your final salary at age 65 is a pension of half your final salary at age 65, whether it is paid by the original scheme, an insurer, or a superfund.

What can change is the layer of protection that sits behind your pension if something goes wrong with the entity paying it. That is worth understanding because each route brings a different protection regime.

If your scheme stays on a “run on” path

The Pension Protection Fund (PPF) continues to be the long-stop safety net. If your employer becomes insolvent and the scheme does not have enough assets to secure your benefits with an insurer, the PPF can take the scheme over and pay broadly equivalent benefits, subject to PPF compensation rules.

If your scheme buys out with an insurer

Your pension is then a contract with a UK-authorised insurance company, regulated by the Prudential Regulation Authority (PRA) and the FCA. The Financial Services Compensation Scheme (FSCS) provides a separate protection layer for long-term insurance, currently set at 100% of the benefits with no upper limit. The PPF no longer plays a role because the scheme has ceased to exist.

If your scheme consolidates into a superfund

The superfund must be authorised by TPR and must hold capital buffers designed to provide a high degree of protection. If, despite those buffers, the superfund fails, the PPF can step in. This is a newer model, so the practical experience of how protection works in the real world is more limited than for the run-on and buy-out routes.

The “surplus release” question

One reason endgame planning has become a hot topic is the prospect of legally releasing some of the surplus money sitting in DB schemes. The Pension Schemes Act 2026 enables the government to write new rules on when and how a sponsor (and potentially members) can receive payments from a scheme’s surplus. TPR signalled in the 2026 AFS that it will publish “early views” on surplus release shortly, alongside a DWP consultation on the detailed regulations.

For now, the practical position is unchanged: surplus release under the new framework is not yet permitted, and any payments out of a scheme still have to comply with the existing scheme rules and the existing legal framework. The new rules, when they arrive, are expected to require trustees to remain confident the scheme can still meet all member benefits in a range of adverse scenarios before any surplus is released.

If you are a member, the most realistic timetable for any direct financial impact from surplus release rules is some way off. The Act is law; the regulations are not yet drafted; and even once they are in force, the decision to release surplus, and to whom, sits with trustees and sponsors, governed by scheme rules.

How this connects to the wider 2026 pensions picture

The AFS does not exist in isolation. Several related strands of policy are moving at the same time.

Pension Schemes Act 2026. The Act became law on 29 April 2026. It contains the enabling powers for the surplus regime, plus changes affecting LGPS pooling, dashboards, and the Pensions Ombudsman.
Funding code. The DB funding code of practice, in force since April 2024, requires schemes to set a long-term funding objective at a level of “low dependency” on the sponsor by the time they are significantly mature.
Pensions dashboards. The connection deadline for occupational pension schemes is 31 October 2026. Members will eventually be able to see all their pensions, public and private, in one place via MoneyHelper.
NIC Act 2026. From 6 April 2029, employer National Insurance will apply to salary-sacrificed pension contributions above £2,000 per employee per year. This is private DB or DC oriented, but salary sacrifice is also used by some public sector employers for additional voluntary contributions.

Taken together, the direction is clear: DB pensions are moving from a “fix the deficit” world into a “manage the surplus and the journey” world, while the legal scaffolding around member rights, dashboards, and tax is being rebuilt at the same time.

What to look for in your own scheme

If you are a deferred or active DB member, here are the practical questions you can keep an eye on through your scheme communications without needing to make any immediate decisions:

Does the next trustee newsletter or annual report mention an endgame target (run on, buy-out, or superfund)?
If buy-out is on the table, is there a target date and an indicative funding level the trustees say they want to reach first?
Is the scheme’s funding update consistent with the wider picture (well-funded, with a surplus on the technical provisions and low dependency measures)?
If your employer has announced any intention to seek a surplus release, is the scheme’s trustee statement clear that members’ accrued benefits are not at risk?
Where is your scheme on its dashboards connection timeline?

None of these requires you to do anything; they are simply what to listen for as the 2026/27 valuation cycle works its way through.

FAQ

Does the 2026 Annual Funding Statement apply to public sector schemes like the NHS, LGPS, or Teachers’ Pension?

No, not directly. TPR’s Annual Funding Statement is aimed at private sector DB schemes that are subject to its funding code. Public service pension schemes have their own valuation cycle and rules, set out in the Public Service Pensions Act 2013 and run by HM Treasury, government departments, and the scheme advisory boards. The LGPS is the partial exception because it is a funded scheme, but its valuation regime is separate from the TPR statement.

If my DB scheme is in surplus, will I get a bigger pension?

Not automatically. Your pension is determined by your scheme rules and your service history, not by how well the scheme’s investments have performed. A surplus can sometimes be used to fund discretionary benefit improvements, but that is a decision for the trustees (and sometimes the sponsoring employer) under the rules. Until the new surplus regulations are in force, the ways a surplus can be applied are limited.

Is a buy-out safer than my current scheme?

It is different rather than universally safer. A buy-out replaces the sponsor and the PPF with a regulated insurer plus the FSCS. Insurers have to hold strict capital reserves, and FSCS protection for long-term insurance currently covers 100% of benefits. Whether that profile is “safer” than the run-on profile depends on the strength of the sponsor and the funding of the scheme. Trustees take legal advice before completing a buy-out and have to act in members’ interests.

What is a “superfund” in pensions?

A superfund is a commercial DB consolidator that takes over the assets and liabilities of one or more pension schemes and runs them together. The model is meant to deliver better governance and lower costs for smaller or stressed schemes. Superfunds have to meet TPR’s authorisation framework, which includes capital requirements and ongoing supervision.

Where do I check the funding level of my own scheme?

The Summary Funding Statement that scheme trustees send to members at least once a year is the formal route. It typically reports the latest funding level on both an ongoing (technical provisions) and a wind-up (buy-out) basis. Annual benefit statements may also include scheme funding information.

Does this affect my State Pension?

No. The State Pension is a separate, pay-as-you-go scheme run by the Department for Work and Pensions, funded through National Insurance contributions and general taxation. The TPR Annual Funding Statement is about workplace DB schemes, not State Pension entitlement.

Pension Plain’s take

The 2026 AFS reads less like a regulator catching schemes up on their homework and more like a regulator nudging trustees to make a decision. For members, the most useful framing is that the question on the table is no longer “is my scheme going to be able to pay me?” It is “who exactly is going to be paying me, and under what protection regime?” Those are different problems, and the answer matters most for members with many years still to go. If your scheme communicates an endgame strategy in the next 12 months, that is a normal part of the new landscape, not a sign of trouble.

Information, not advice. This article explains how the Pensions Regulator’s 2026 Annual Funding Statement works and what its main themes mean for ordinary DB scheme members. It is not financial, tax, or legal advice. Pension Plain is not authorised or regulated by the Financial Conduct Authority. If you need a personal recommendation about your pension, speak to a qualified, FCA-authorised financial adviser; you can find one via the FCA register or via MoneyHelper.