Trustees, employers and members invited
to shape new rules on how Defined Benefit (DB) surpluses can be safely released
Plan will give trustees the option to unlock
billions of pounds, with around four in five
DB schemes in surplus
Part of ambitious pension reform agenda to boost both
investment and savers pensions
New proposals setting out how billions of pounds in DB pension scheme surpluses could
be safely released have been launched today (10th
June), helping unlock billions of pounds for the UK
economy.
Launched by the Minister for
Pensions today, the consultation sets out plans to
give trusteesthe flexibility to release some surplus funds
to benefit employers, scheme members and the wider economy.
Funding levels for DB
pension schemes are currently in their strongest ever financial
position, with the number of schemes in surplus having quadrupled
over the last five years, meaning that for most schemes assets
now exceed the value of promised pension benefits.
The proposals include strong protections
for scheme members, including the need for independent
certification that scheme funding will remain strong after
any surplus release.Changes to tax law will also make it easier
for schemes to allow scheme members to benefit from a surplus
release.
Following the passing of the Pension Schemes Act, this
consultation marks the next stage in a programme of reform
that will boost investment and benefit pension savers.
Minister for Pensions said:
The steady world of DB
pensions has seen a huge change take place. For the first
time in a generation, DB
pension schemes are in a genuinely strong
financial position with the vast majority
of schemes now having a surplus. This is something
well worth celebrating.
Now is the time to give trustees the option of safely translating
some of those surpluses into real benefits for members and
employers.
The plans will strengthen regulatory oversight, with trustees
required to notify The Pensions Regulator (TPR) of surplus
release detailing information such as a scheme's assets,
liabilities and surplus payments to employers and members. TPR
and the Financial Reporting Council will also be providing
further guidance and support to the regulations.
The consultation will run for 12-weeks with the new regime
expected to be in place from April 2027.
The Pensions Regulator has today issued a statement to help
trustees understand the best practice now under the current
regulatory framework.
Richard Knox, TPR's Executive Director, Strategy, Policy
and Analysis, said:
Many well run, well governed and well-funded defined benefit
schemes are also considering how to safely release surplus to
enhance member benefits and strengthen sponsoring employers. To
help, today, we have set out the principles schemes
should follow when making decisions on surplus which we will
continue to evolve as the new regulatory framework emerges.
The consultation swiftly builds on the landmark Pension
Schemes Act 2026 that received royal assent in
April and forms part of the Government's wider
programme to reform the pensions system to support savers
pensions and investment in the wider economy.
Additional Information
The consultation was launched at the PMI conference
on Wednesday 10th June and will be available for
comment until Wednesday 2 September.
It is open to everyone, but we would particularly welcome
views from sponsoring employers and trustees of DB schemes, managers and service
providers, members of DB
pension schemes and groups representing members.
The draft regulations cover the requirements that will need
to be met for schemes to release surplus. These protections
include actuarial certification that schemes will remain funded
above a minimum funding threshold for DBschemes, as well as requirements for
member notification. Powers sit with trustees who have a legal
dutyto act in the interest of scheme beneficiaries.
The Pensions Regulator
(TPR) will provide guidance for trustees to
support the regulations, and the Financial
Reporting Council will provide technical guidance for
actuaries.
