Policy and geopolitical uncertainty drive record proportion of profit warnings among UK-listed firms with DB sponsors

• More than half (57%) of the 14 profit warnings issued by UK-listed firms with a Defined Benefit (DB) pension scheme during Q3 referenced the impact of policy change and geopolitical uncertainty – the highest proportion ever recorded for this cause
• The other main drivers of warnings from UK-listed companies with a DB sponsor in Q3 were contract and order cancellations or delays, and weaker consumer confidence (both 29%)
• Warnings from UK-listed companies with a DB pension scheme accounted for over a fifth (22%) of the 64 issued by all UK-listed businesses in the third quarter

More than half (57%) of the 14 profit warnings issued by UK-listed companies with a Defined Benefit (DB) pension scheme during Q3 2025 cited the impact of policy change and geopolitical uncertainty, according to EY-Parthenon’s latest Profit Warnings report.

This marked the highest percentage recorded for this cause in more than 25 years of EY’s analysis, and a significant year-on-year increase from 15% in Q3 2024.

UK-listed firms with DB sponsors have now issued 48 profit warnings so far this year, down slightly on the 53 issued at the same stage of 2024. The other two main drivers of warnings during the third quarter were contract and order cancellations or delays, and weaker consumer confidence – both accounting for 29% of warnings.

Across all UK-listed companies, 64 profit warnings were issued in Q3, with more than a fifth (22%) coming from firms with DB pension schemes.

More than a quarter (27%) of all UK-listed companies with a DB pension scheme have issued a profit warning within the last 12 months.

Karina Brookes, UK Pensions Covenant Advisory Leader and EY-Parthenon Partner, said: “The latest data highlights the challenges that ongoing policy and geopolitical uncertainty are creating for schemes and sponsors when it comes to developing their long-term strategies. For employers, the stronger funding position of many schemes may mean there is an opportunity to use surpluses in the short-term to mitigate pensions costs such as expenses and unfunded liabilities, and potentially even support DC funding. For trustees of schemes that have a surplus available, their focus will be on ensuring that the position of their members is protected while exploring the variety of options now available or coming to market. In this environment, it will remain critical to ensure any covenant support is fit for purpose.”

Paul Kitson, UK Pensions Consulting Leader at EY, added: “We find ourselves in an interesting juxtaposition, where DB pension schemes remain very well-funded, yet there is significant uncertainty impacting schemes’ sponsors. For schemes with the funding and willingness to buy-out in order to separate themselves from their sponsor and secure benefits with an insurer, now may be the time to move quickly. This is particularly timely, as buy-out pricing remains highly attractive by recent standards.

“For schemes looking to run on, the ongoing geopolitical turbulence means that ensuring strategies are robust against sponsor volatility and external headwinds remains crucial.”