United Kingdom's HM Treasury outlines reforms to allow defined benefit pension schemes to access GBP 160 billion of surplus

HM Treasury set out planned changes to the management of occupational defined benefit (DB) pension schemes that would lift restrictions on the use of surplus assets, allowing well-funded schemes to deploy excess funds more flexibly, including for investment in the wider economy and potential additional benefits for scheme members. The proposals would create a route for trustees and sponsoring employers to agree on sharing a portion of scheme surplus with the employer, which could then be invested in the employer’s business and/or used to provide additional benefits to members. HM Treasury highlighted that around 75% of DB schemes are currently in surplus, totalling about GBP 160 billion, but existing restrictions have limited the ability to access these funds; it noted that surplus can currently only be accessed where schemes passed a resolution by 2016. Any surplus extraction would remain subject to trustees’ fiduciary duty to act in members’ best interests and to ensure the scheme is funded so members receive their full benefits. The government said further detail on the surplus policy will be set out in its response to the Options for Defined Benefits consultation, due in Spring 2025.