For schemes with a focus on insurance buy-out, trapped surplus can be a real area of concern for sponsoring companies. To reduce the risk of a trapped surplus, employers need a proactive approach that gives careful consideration to the legal complexities and the relationship between the employer and trustees.

The Department of Work and Pensions (DWP) consultation could bring about significant change, in the best interest of members and employers. But any change will take time to implement. If a potential trapped surplus isn’t factored into valuation discussions now, employers could find themselves at a disadvantage

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