Pensions Regulator publishes its first Annual Funding Statement under the new funding code

The Regulator's annual DB funding statement for 2025 was published on April 29, 2025. This statement and the accompanying analysis paper are particularly relevant to schemes with valuation dates between September 22, 2024, and September 21, 2025, now known as Tranche 24/25 or T24/25 to reflect the calendar year (previously known as Tranche 20 or T20).

The statement is the first since the new DB funding regime came into force for schemes carrying out actuarial valuations with effective dates for the 12 months starting from September 22, 2024.  

The statement confirms that over half (54 per cent) of pension schemes are in surplus on a buyout basis, rising to 76 per cent on a low dependency basis and 85 per cent on a technical provisions basis. The overall improvement in schemes' funding positions underpins the Regulator's comment that "we expect most schemes to be shifting their focus from deficit recovery to endgame planning". 

The Regulator acknowledges that there may be future changes on the way that schemes can treat surplus and that trustees should also be considering how they would respond to potential requests from employers to release some of their scheme's surplus. 

The statement also offers guidance to schemes on how it can be used to inform their funding discussions, including working collaboratively with their different advisers throughout the process of complying with the new funding code. In addition, it states that trustees should keep in mind the potential for heightened trade and geopolitical uncertainty and understand any risks to the scheme's investment strategy and employer covenant.

Our May 2025 pensions briefing will look at the funding statement in more detail.