Question to the Department for Work and Pensions:

To ask the Secretary of State for Work and Pensions, what assessment he has made of (a) the adequacy of the statutory framework governing surplus extraction under the Pension Schemes Act 2026 for providing sufficient protection for scheme members, and (b) the potential impact of the fact that there is no requirement for members to receive a share of released surplus before payments are made to sponsoring employers on protections for scheme members.

The Government published an Impact Assessment alongside the Pension Schemes Act 2026, which included an assessment of member security impacts from surplus extraction is considered low.

Decisions to release surplus will be subject to trustee discretion and underpinned by strict safeguards. Trustees, who are required to act in the interests of scheme beneficiaries, will determine how members may benefit from any release of surplus.

We have recently consulted on draft regulations setting out the requirements for surplus release and protections for scheme members. They require actuarial certification that scheme funds remain sufficient to pay members’ promised pensions, both at the point of release and under a forward-looking test. The scheme actuary must be satisfied that the sufficiency test will continue to be met for a three year period after surplus funds have been released to employers and any additional member benefits which may have been included, ensuring that member protections are not eroded. Schemes will remain subject to the statutory funding framework.

When the surplus regulations come into force, the Pensions Regulator will issue guidance outlining matters for trustees to consider when releasing surplus, including whether members may also benefit. This guidance will be subject to consultation before it is published.