Government Pension Reform: Hymans Robertson Comments on DB Surplus Flexibility

Commenting on the governments pension reform update regarding DB Surplus, Sachin Patel, Head of Corporate DB Endgame Strategy, Hymans Robertson says:

“We welcome the news that the Government’s focus is back on changes to increase the flexibility around DB surplus. Done carefully, with the right guidance and safeguards, this would help to open up the prospect of more DB schemes running-on for longer and in ways that can benefit members, sponsors and, with the right investment opportunities in place, the wider UK economy. There is more than £160bn of surplus capital in private sector DB pensions schemes and growing. But whilst options are available to some schemes, the ability to use surplus does not exist for all. 

“As always, the details will be key. To ensure surplus sharing has a meaningful impact, it will be important for current legislative restrictions to be lifted whilst introducing smart tax initiatives. These could include incentives for investing in UK assets or tax-favourable mechanisms for sharing surpluses with other employer-based defined contribution pension schemes. Crucially, any changes should not cut across the fiduciary duties of DB pension scheme trustees and must ensure that existing member benefits continue to be safeguarded and secure.

“With many more schemes now strongly funded, it’s encouraging to see the topic of access to DB surplus gaining some momentum. At this important juncture, any lack of clarity risks stifling decision making and could mean opportunities are missed.”