On 10 June 2026, the Department for Work & Pensions (DWP) published a public consultation on the draft Occupational Pension Schemes (Payments to Employer) Regulations 2027 (the Regulations).
Published: 11 June 2026
Authors: Rhiannon Barnsley-Bloomfield
What is the background?
The Pension Schemes Act 2026 permits the trustees of a pension scheme, by resolution, to amend the scheme rules to:
- introduce a power for the trustees to make payments to the employer of the scheme out of scheme funds where no power currently exists
- remove or relax any restrictions imposed by the scheme rules on any existing power to make payments to the employer of the scheme out of scheme funds.
The draft Regulations set out the conditions which must be met to release surplus from DB schemes. The DWP’s stated aim is to “strike the right balance” with the Regulations between “strong protection for members” while “unlocking value” for employers and scheme members.
What do the draft Regulations say?
The draft Regulations set out what the DWP describe as “clear safeguards” that must be met before surplus can be released. Interesting takeaways include:
- a requirement for trustees to obtain an actuarial assessment to confirm the scheme meets the funding threshold for surplus release; namely that the scheme is funded on at least a low dependency funding basis. The low dependency funding threshold differs from existing regulations which use the buy-out basis as the threshold
- an actuarial certificate must confirm that the scheme is expected to remain funded at or above the low dependency funding threshold, not just at the point of surplus release, but also over the following three years
- any surplus payment must be made within five working days of actuarial certification to ensure that surplus release reflects the scheme’s most up-to-date funding position
- a written statement must be sent to members at least three months before the trustees plan to release surplus, which under the existing regulations require the exact amount to be specified
- TPR must be notified within one week of the payment being made of: (i) the amount of the scheme’s assets and liabilities, (ii) the amount that the assets exceed the liabilities on a low dependency basis, (iii) the effective date of the actuarial assessment and (iv) the amount of the payment to the employer. Details must also be provided of any member benefit enhancements and any authorised surplus payments being made to members; and
- sectionalised schemes with more than one employer can use the powers in the Pension Schemes Act 2026 to modify the scheme rules to enable the payment of surplus as if each section were a separate scheme.
What is next?
The consultation closes at 11:59pm on 2 September 2026. Initial feedback when discussing the draft with our clients and industry contacts is that some of the timings look tight, for example, the time between the actuarial certificate and payment of the surplus.
TPR published a statement on 10 June 2026 to support discussions between trustees and employers on surplus release options. The statement provides TPR’s early views on some of the principles that trustees should consider when releasing surplus. It also provides some high-level illustrative examples for how trustees could go about releasing surplus now (if permitted under scheme rules), and how this might change when the Regulations are in force.
TPR’s statement clearly recognises that “Trustees’ independence on the decision to release surplus is unaffected by these new flexibilities” as well as recognising that “Trustees must be satisfied, in the proper exercise of their fiduciary duties, that a surplus release is appropriate.”
The new regime is expected to come into force in April 2027. There will be no transitional measures associated with the Regulations, so any release of surplus before the Regulations come into force will be subject to the current regime. TPR intends to consult later this year on guidance outlining factors for trustees to consider on surplus release.
DWP intends to make a separate provision for surplus release from DB superfunds.
Key takeaways
Trustees and employers of well-funded schemes should keep a watching eye on developments in surplus release. Although the Regulations have not yet been finalised, trustee and employers that are considering utilising the new powers can start discussions now based on the key principles, recognising that each is likely to have different considerations in such discussions.
The changes introduced by the Pension Schemes Act 2026 and draft Regulations provide a framework under which a scheme surplus may be paid to scheme employers. What is paramount for Trustees is to ensure that any action under that framework is underpinned by their general fiduciary obligations to act in members’ and beneficiaries’ interests. Trustees, employers and their advisers should consider whether the timetable suggested by the Regulations is likely to be workable in practice.
We will continue to monitor developments and will be commenting further as the Regulations and TPR guidance unfolds. Noting that TPR’s statement is mostly aimed at trustees, we are looking to consider the position from an employer’s point of view and will provide some commentary in due course.