Pensions - Articles - Changes to rules on DB surplus need to go further

 According to the statement the new rules will apply where there is agreement between trustee and sponsor, and surplus funds could be used in a variety of ways. However, there is no indication of any plans to give trustees greater ‘comfort’ about the security of member benefits once surplus funds are extracted and this could limit the take-up of the new freedoms, according to LCP partner and former pensions minister Steve Webb.

 Steve Webb said: "The government’s commitment to freeing up access to DB surpluses is a very welcome development and offers the potential to benefit employers, pension scheme members and the wider economy. In some cases, it will be possible as things stand for an employer to give a trustee enough comfort about the security of member benefits for the trustee to allow some surplus to be extracted. But ideally the government would go further and offer a way of guaranteeing member benefits, such as enhanced cover by the Pension Protection Fund, which would allow all surplus schemes to participate in this new option. We need something bigger and bolder to maximise the potential of these reforms”.