DB surplus rule changes

Many factors, including rising bond yields, have improved DB funding of late, and now a significant portion of the UK DB schemes are in surplus. Unlocking these surpluses back to the sponsoring employer, supports the government’s growth agenda.  Current legislation makes it difficult for trustees to do this. A proposal to unlock billions to drive growth and boost people’s pension pots under a series of reforms is being consulted.

The Government press release suggested that: ‘Pension trustees and the sponsoring employers could then use this money to increase the productivity of their businesses – to boost wages and drive growth or unlock more money for pension scheme members.’

Pension associations such as the PLSA are reported to be in support of these with the right protections in place, to ensure member benefits are secure.

This could certainly be an incentive for schemes to run on, the consultation entitled: ‘Options for DB Pension Schemes’ began on 23 February 2024 and runs until 19 April, after which the government is expected to set out the details of the surplus policy.