Pension scheme risks weigh heavily on UK business balance sheets

This comes despite the fact that 86% of DB schemes currently have a surplus. The findings reveal that 7% of respondents believe their pension scheme presents a significant risk, while 57% categorise it as a moderate risk. A further 29% agree that their scheme brings limited risk, leaving only 7% of decision-makers who see no risk at all from their pension scheme. 

Among the top drivers of risk, cyber threats - including technology failures - stand out, with 92% of finance decision-makers acknowledging cyber as a key business risk. Furthermore, cyber risk ranks as the highest perceived risk, with 18% of respondents classifying it as the most severe.

This is followed closely by financial risk at 91%, as business leaders share concerns over returning to a deficit, and people risk also at 91%, owing to concerns about staff carrying heavy workloads.

Cyber risk, e.g. tech failure	92%
Financial risk – e.g. returning to deficit	91%
People risk – e.g. increased/unsustainable workload for team	91%
ESG risk – e.g. asset allocation not aligned with ESG ambitious	89%
Data risk – e.g. confidential data breach	88%
Reputational risk – e.g. member complaints	85%

ESG risk, such as the scheme’s ESG strategy not being aligned with business ambitions, is also weighing heavily on finance decision-makers (90%), as are fears of data breaches (88%). Though reputational risk ranks as having the least risk on balance sheets, a significant number of finance decision makers (85%) share concerns over its impact.

Sankar Mahalingham, Managing Director of LawDeb Pensions, commented: “The research shines a light on the increasing pressures businesses face in managing pension schemes, alongside broader financial and operational risks. It also exposes an interesting juxtaposition - more than four-fifths of DB schemes are in surplus, yet business leaders are still incredibly conscious of risk. Addressing these risks proactively is crucial for maintaining financial stability and business resilience, while ensuring the scheme continues to provide benefits to its members.

“As our findings highlight, increasingly unsustainable workloads are posing significant risk to schemes. Utilising independent trustees and governance providers can be an effective way to remove the burden currently weighing heavily on business leaders. As well as reducing risk, this can also ensure that members are kept at the heart of any decisions relating to a scheme.”

ENDS

Methodology

The research was conducted by Censuswide on behalf of LawDeb, surveying 150 finance decision makers in the UK who have input on their company’s DB scheme, and who are not sole traders, in December 2024. 

Media contacts
Sandy Downs / Joe Hirst
lawdebenture@teamspirit.co.uk 
07384 907528 / 07385023671