How can employers benefit from pension scheme surpluses?
How can employers benefit from pension scheme surpluses?
17 Dec 2024
Many defined benefit (DB) pension schemes are better funded than ever before. As part of the new requirements for schemes to set a long-term objective, employers are taking the opportunity to bring surpluses to the discussion and understand how it may be extracted and used.
At a glance
- There is an estimated total surplus of c.£200bn across all UK DB schemes which is expected to grow further in future.
- The Government has been consulting on the topic of surplus - to potentially make it easier for employers to extract it. This presents opportunities for employers.
- Whether you choose to run on in the long-term, or in the short-term ahead of an insurance buyout, employers can consider how to generate surpluses to be extracted and used in an effective way as part of their long-term strategy.
- Any surplus extracted can support the employer’s wider business objectives and create value for both the employer and scheme members.
This edition of XPS Express is the third in a series on setting long-term strategies. Read part one and part two.