Government signals intention to use DB funds to power growth
Pensions
The Government has announced that it will relax the rules on accessing defined benefit (DB) scheme surpluses.
It has been announced that the Government will give businesses greater flexibility to access trapped surpluses to invest in the wider economy or to provide additional benefits to scheme members. The Government suggests that Trustees and employers will be able to agree to extract surplus, even in schemes whose rules do not currently permit this (though it acknowledges Trustees’ overarching fiduciary duty to act in members’ best interests).
The Government will set out details of its surplus policy when it responds to the previous Government’s Options for Defined Benefits consultation in the Spring.
The Pensions Regulator (TPR) is supportive of the announcement, Chief Executive, Nausicaa Delfas, said: “Where schemes are fully funded and there are protections in place for members, we support efforts to help trustees and employers consider how to safely release surplus if it can improve member benefits or unlock investment in the wider economy.” It has also produced some information to demonstrate the size of surpluses at 30 September 2024 which shows that 82% of schemes are in surplus on a Technical Provisions basis.
We have been encouraging Government for some time to seize the initiative and to unlock further value in DB pensions with our Outpacing change proposals. TPRs supportive comments are encouraging since detailed and balanced guidance was a key area highlighted as being needed to get trustee boards comfortable to use any new surplus extraction powers in our survey of Professional Trustees.

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