HM Treasury announces reforms to unlock pension fund surpluses for economic growth

Article summary

HM Treasury has unveiled plans to reform occupational defined benefit (DB) pension schemes, allowing greater flexibility in the management and investment of surplus funds. The changes aim to unlock an estimated £160 billion currently held in surplus by approximately 75% of schemes. The reforms will enable well-performing funds to invest surplus capital into the wider economy, potentially boosting growth and benefiting both businesses and pension scheme members. Legislative changes are proposed to allow all DB schemes to modify their rules for surplus extraction, subject to trustee-employer agreement. The government emphasises that these changes will be implemented with appropriate safeguards to protect member benefits. Full details of the surplus policy will be outlined in the government's response to the Options for Defined Benefits consultation, expected in Spring 2025.