Overview
- The Department for Work and Pensions published a consultation on Wednesday that sets out how trustees could release surplus assets from overfunded defined benefit pension schemes.
- The proposal would replace the current buyout-based funding test with a lower 'low-dependency' threshold and add a forward-looking test to check that any payment will not weaken future scheme funding.
- The consultation would require independent actuarial certification, formal trustee governance and professional advice, sponsor agreement, at least three months' notice to members and reporting to the Pensions Regulator.
- Industry groups have welcomed the review but warned that surpluses can vanish quickly in market stress and that member payment depends on trustee decisions rather than being automatic.
- The consultation is open until 2 September 2026, reflects a shift after a period when surpluses quadrupled, and the government has signalled these rules could come into force around April 2027.