The Society of Pension Professionals (SPP) in the UK has backed the Department for Work and Pensions’ draft regulations on defined benefit (DB) surplus flexibilities.
The SPP noted that the framework safely allows well-funded schemes to release surplus capital while protecting members.
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Under the proposals, the organisation supports using a low-dependency funding benchmark as the baseline funding test.
It maintains that trustees should retain full discretion over the value of surplus released, factoring in employer covenant robustness and individual scheme circumstances.
However, the representative body is calling for targeted revisions to make the regime workable in practice, particularly for schemes aiming to operate on a long-term run-off basis.
The group noted that the current draft favours single, lump-sum transactions.
Consequently, this structure risks creating excessive administrative burdens for schemes pursuing regular or phased distributions.
To address this, the SPP is seeking greater operational flexibility in the distribution process.
Key proposals include permitting trustees to pay out less than the provisionally agreed amount without restarting the procedure, as well as extending the five-day window between actuarial certification and final payment.
The body also recommended refining the prospective three-year actuarial test to curb uncertainty and prevent disproportionate costs.
It suggested adopting terminology that conforms more closely with existing actuarial certification standards.
Finally, the organisation called for statutory alignment between pensions and tax legislation for segregated schemes, warning that current legal ambiguities could delay valid surplus returns.
SPP DB Committee chair Jon Forsyth said: “The SPP welcomes the government’s proposals, which at a high level provide a sound framework for well-funded DB schemes to make productive use of surplus while protecting members.
“However, the regime needs to work effectively in practice. Greater flexibility around regular and phased payments, the actuarial tests and payment timetable would help ensure the new framework delivers its intended benefits without creating unnecessary governance burdens or other unintended consequences.”
