Pension Schemes Bill: Employer surplus-payment provisions pass Grand Committee scrutiny unchanged
At the third day of Grand Committee on the Pension Schemes Bill on 19 January 2026, the House of Lords undertook an extensive examination of Clauses 9 (Power to modify scheme to allow for payment of surplus to employer) and 10 (Restrictions on exercise of power to pay surplus), with debate focused on a series of amendments that tested how far the new surplus release regime should be constrained in primary legislation. In particular, peers tabled amendments seeking to change the terminology from ‘surplus’ to ‘assets’, to require surplus to be shared with members, to mandate benefit enhancements including inflation protection, to strengthen member notification or consultation (including trade union involvement) in the surplus release process, to constrain the Secretary of State’s regulation-making powers, to embed actuarial and endgame requirements in statute, and to alter insolvency priorities where employers had previously extracted surplus. The government response, delivered principally by Baroness Sherlock, consistently resisted the amendments to prescriptive statutory rules governing the use of surplus or the processes surrounding its release, and instead defended the Bill’s reliance on trustee discretion, fiduciary duties, actuarial certification, and regulatory oversight by the Pensions Regulator. All amendments were either withdrawn or not moved following government opposition, and Clauses 9 and 10 were agreed without amendment.