Defined benefit (DB) pension schemes—who owns the surplus?

Produced in partnership with Wyn Derbyshire of gunnercooke LLP

Practice notes

Defined benefit (DB) pension schemes—who owns the surplus?

Produced in partnership with Wyn Derbyshire of gunnercooke LLP

Practice notes

FORTHCOMING DEVELOPMENT: While hosting a roundtable meeting with leaders of the UK’s biggest businesses in the City of London on 28 January 2025, Prime Minister Keir Starmer and Chancellor Rachel Reeves outlined plans to lift restrictions on Defined benefit (DB) pension funds with well-funded Surpluses in order to free up capital for investment in UK businesses as part of the Labour government's wider application to fuel economic growth. The government’s thinking is that where trustees agree to share a portion of scheme surplus with the employer, it may choose to invest these funds in their core business and/or provide additional benefits to scheme members. The changes aim to unlock an estimated £160 billion currently held in surplus by approximately 75% of schemes. Legislative changes are proposed to allow all DB schemes to modify their rules for surplus extraction, subject to trustee-employer agreement. However, the government emphasises that these changes will be implemented with appropriate safeguards to protect member benefits. These surplus reforms build on the Chancellor’s proposals outlined on 14 November 2024 during

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Wyn Derbyshire

Partner, gunnercooke LLP

Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.

He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.

Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.

He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also written several other books and numerous articles on a variety of legal and non-legal topics.

Jurisdiction(s):

United Kingdom

Key definition:

Defined benefit definition

What does Defined benefit mean?

Benefits calculated by reference to a fixed formula, irrespective of the contributions paid or in-vestment performance.

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