Government confirms intent to include surplus extraction proposals in forthcoming Pension Schemes Bill
In a press release, the Department for Work and Pensions (DWP) has confirmed plans to allow defined benefit (DB) pension schemes to release part of their surpluses under the upcoming Pension Schemes Bill. The press release highlights that DB pension schemes in the UK have now reached their highest recorded funding levels, with more than 75% of schemes currently operating in surplus leading to a reduction in annual employer contributions to cover funding deficits, which have fallen from £16bn in 2010 to under £5bn in 2024. In response, the government intends to introduce the Pension Schemes Bill, which will permit trustees and sponsoring employers to access a portion of surplus funds, subject to regulatory safeguards. The released funds may be used to support business investment or enhance benefits for scheme members, while maintaining protections for beneficiaries. The exact details of the surplus policy will be set out in the government’s response to the ‘Options for Defined Benefit Schemes consultation’, which the DWP said is expected to be published in the ‘coming weeks’.