The Department for Work and Pensions (DWP) has confirmed new defined benefit (DB) pension rules that will take effect from April 2027. The proposals outline how billions of pounds in DB pension scheme surpluses could be safely released.
Announced on 10 June, the new rules have a 2027 start date set by the Labour Party government. Under these changes, trustees, employers, and members are invited to help shape regulations on how DB surpluses can be released safely.
The rules give trustees the option to unlock billions of pounds, as around four in five DB schemes currently hold a surplus. This forms part of an ambitious pension reform agenda aimed at boosting both investment and savers' pensions.
A consultation launched on Thursday, 11 June, sets out plans to provide trustees with the flexibility to release surplus funds to benefit employers, scheme members, and the wider economy.
The proposals include strong protections for scheme members, such as requiring independent certification that scheme funding will remain robust after any surplus release.
Minister for Pensions Torsten Bell said: "The steady world of DB pensions has seen a huge change take place. For the first time in a generation, DB pension schemes are in a genuinely strong financial position – with the vast majority of schemes now having a surplus. This is something well worth celebrating. Now is the time to give trustees the option of safely translating some of those surpluses into real benefits for members and employers."
Richard Knox, TPR’s Executive Director of Strategy, Policy and Analysis, added: "Many well-run, well-governed, and well-funded defined benefit schemes are also considering how to safely release surplus to enhance member benefits and strengthen sponsoring employers. To help, today, we have set out the principles schemes should follow when making decisions on surplus, which we will continue to evolve as the new regulatory framework emerges."
