DB schemes could struggle to take advantage of the government’s new surplus flexibilities unless trustees address shortcomings in member data, administration and technology, according to Lumera.
The insurtech firm said high-quality data will be critical if trustees are to accurately identify which members are eligible for payments or benefit improvements and calculate what they are due under the proposed new regime.
Its warning comes as the Department for Work and Pensions’ consultation on the regulations governing DB surplus extraction approaches its 2 September deadline. The proposals are designed to make it easier for well-funded schemes to share surplus with sponsoring employers and members, while retaining safeguards around members’ existing benefits.
The intervention adds to a series of industry concerns about how the new framework will work in practice. XPS has called for stronger safeguards around scheme funding and employer covenant, while the Association of Consulting Actuaries has warned that poorly calibrated rules could discourage schemes from running on and ultimately undermine the government’s wider ambitions to increase investment in growth assets.
Lumera commercial director, data & dashboards, Maurice Titley said: “The Government’s proposed surplus extraction reforms will place even greater importance on schemes having high-quality, accurate member data.
“With one of the proposed options allowing surplus to be returned directly to members, trustees will need confidence that they have a complete and accurate picture of their membership and benefit entitlements.”
He said the reforms could create additional demands for scheme administrators, regardless of whether trustees choose to use surplus for discretionary benefit improvements or authorised payments to members.
Titley adds “Identifying who is eligible, calculating what they are due, and administering payments or benefit improvements correctly will all depend on the quality of the underlying data and the systems supporting it.”
The government estimates that around four in five DB schemes are now in surplus, with an aggregate surplus of around £160bn. The Pension Schemes Act 2026 introduced changes intended to give more well-funded schemes the flexibility to share surplus with sponsoring employers and members.
Under the proposed regulations, trustees would remain the key decision-makers and schemes would have to meet funding and other safeguards before surplus could be released. The government says the changes are intended to give trustees greater flexibility over their long-term strategy while maintaining member security.
However, the industry has raised a number of concerns about the detail of the proposed regime.
Titley said data and administration should now form part of trustees’ preparations for the reforms.
“High quality data will be fundamental to schemes making effective use of the new flexibilities while ensuring members receive the correct payments or benefit improvements.
“As trustees consider their endgame options, they should therefore be looking closely at the quality and robustness of their data and administration processes, and ask themselves whether their technology is capable of supporting the more complex outcomes these reforms could enable.
“Without those foundations, schemes may struggle to take advantage of the new flexibilities in a way that is efficient, accurate and fair for members.”
