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£40bn to be released from DB schemes as trustees signal support for new surplus rules

by Emma Simon
June 10, 2025
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Three out of four defined benefit trustees say they intend to adopt the new statutory override, giving themselves the power to distribute surplus funds — according to new research.

The research also found that more than half of DB schemes (57 per cent) said they were now more likely to consider running on DB schemes to build and use surplus funds, following the Government’s clearer direction on surplus flexibilities. Only 7 per cent said they were less likely to do so.

Based on these results, pension consultancy XPS says it estimates that as much as £40bn could be released from these schemes over the next decade — more than five times as much as has been previously estimated by the Department of Work & Pensions. 

This research follows the introduction of the Pension Schemes Bill last week, which contains legislative changes that will enable sponsoring employers to make use of surplus funds, with trustees’ consent. 

This polling was conducted by XPS Group at a webinar event this week, attended by 300 trustees, employers and pension managers.

Commenting on the poll results, XPS head of run-on solutions at XPS Group Tom Froggett says:   “These results should offer reassurance to the Government.  The strong support for running schemes on aligns with our previous research.

“It is interesting to compare this apparent support for the new DB surplus flexibilities with the DWP impact assessment, published on 5 June, which estimated that the new flexibilities would lead to £8.4bn of surplus being extracted over the next decade in a central scenario.  

“We believe this significantly understates the potential of the new DB surplus flexibilities, assuming effective implementation. Our research suggests that the potential surplus value that could be released safely over the next 10 years could be closer to £40bn, around five times higher than the DWP impact assessment.

This underlines the importance of effective implementation to ensure surplus value is maximised for both employers and members, where it is safe to do so.”

 

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