Using DB surplus to fund DC

Rising bond yields have pushed many DB schemes into surplus positions. At a similar time, the tax rate applied to any surplus returned to an employer was reduced from 35% to 25% from 6 April 2024, and at present the Department for Work and Pensions (DWP) is consulting on pension scheme surpluses. Employers with DB surpluses should be proactively considering their options. One such option is the use of DB surplus to fund DC.

We outline some of the ways an employer might be able to use their DB surplus to fund DC within this shifting dynamic:

1. Maintain DB and DC under the same trust
2. Keep DC Own trust open for actives and utilise a Master Trust for deferreds
3. Re-open an Own Trust Arrangement
4. Move members to a Master Trust and share your surplus with a Master Trust provider

Download our publication to find out more or watch our webinar, where we dive into this topic in more detail.

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If you’re considering how you may be able to use your DB surplus to fund DC, or would like further information or support, please get in touch.