Workplace Pensions
The question
To ask the Secretary of State for Work and Pensions, if he will implement safeguards to ensure that release of surplus from defined benefit schemes does not adversely impact the security of accrued benefits.
Answered by Torsten Bell
The Pension Schemes Bill will enable more trustees of well-funded defined benefit pension schemes to share surplus with employers and deliver better outcomes for members. Trustees, working with the sponsoring employer, will be responsible for determining how members may benefit from any release of surplus.
The choice to release surplus is underpinned by strict safeguards, including the requirement for a prudent funding threshold, actuarial certification and member notification. Employers will not have direct access to surplus funds, with any surplus release having to be agreed by trustees.
The surplus release provisions, introduced by the Pension Schemes Bill, will rely on trustees exercising their powers appropriately and in accordance with their trust law duties. If trustees breach these requirements, the Pensions Regulator has powers to take action.
We will consult on the surplus release draft regulations once the Pension Schemes Bill has received Royal Assent. We look forward to receiving the responses on the proposals.
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