Simmons responds to DWP consultation on DB pension surplus return

Simmons & Simmons LLP has provided a comprehensive response to the Department of Work and Pensions (DWP) public consultation on Options for Defined Benefit (DB) schemes:

• We fully support the Government's core propositions on DB scheme surpluses, emphasizing the importance of safety from a member benefit perspective and the pivotal role of trustees in managing scheme funding levels.
• We advocate for a new statutory power for employers and trustee to agree amendments to their scheme rules to permit the sharing of scheme surplus. The current restrictions in the Pensions Act 1995 on surplus return should also be modified. Together, these changes would allow surplus sharing mechanisms to be tailored to the specific needs of each DB scheme.
• We propose changes to the tax regime to facilitate the delivery of surpluses as enhanced benefits. We suggest that surplus extracted from a DB scheme to fund the employer’s ongoing DC registered pension provision in another pension arrangement should not be subject to tax. One off lump sum payments to members should also be permitted on a tax authorised basis.
• We also suggest that the Pensions Regulator is given an additional statutory objective to facilitate the return of surplus to members of DB schemes and their employers.

These proposals reflect Simmons & Simmons LLP's commitment to enhancing the flexibility and security of DB schemes, ensuring they continue to serve the best interests of both members and employers.

A copy of our full response is available here.
For more information, please contact Edward Smith or Danny Tsang.