What We Told the Government
The Association has submitted its full response to the Government's consultation on pension surplus release — nineteen questions, answered with the documented facts of our own scheme. Here is what we argued, in plain English, and the full document to read.
The consultation in one paragraph
The Pension Schemes Act 2026 makes it easier for defined benefit schemes to release surplus to employers, and removes the previous requirement that trustees be satisfied a payment is in members' interests. The detailed rules — the draft Occupational Pension Schemes (Payments to Employer) Regulations 2027 — set out the funding test a scheme must pass, the process to follow, and what members and the Regulator must be told. The Government consulted on those draft rules between June and September 2026, ahead of the regime coming into force in April 2027. Our scheme, 133% funded with a surplus of £484 million at 31 March 2025, is precisely the kind of scheme this framework is written for.
What we argued
Members should be consulted, not notified
Under the draft rules, members are told about a surplus payment after the decision has effectively been made. The consultation document itself describes the member statement as being for information purposes rather than a consultation. We argued that for an irreversible payment of this scale, notification after the fact is a courtesy, not a safeguard — members should be consulted before a payment is agreed, and the cost of affordable improvements to members' benefits should be assessed first.
A surplus partly built on frozen pensions
The scheme's £484 million surplus is calculated on the assumption that pensions earned before April 1997 will never be increased. Part of the surplus exists, in other words, because those pensions have been left behind. We argued that any assessment of surplus should recognise this, and should measure the cost of affordable member improvements alongside any amount proposed for the employer.
Trustee duty alone cannot protect members here
The Government's rationale for removing the "members' interests" test is that it duplicated trustees' existing legal duty. Our scheme is a documented example of why that reasoning does not hold. In our scheme, the power to increase pre-1997 pensions belongs to the employers, not the trustee — and the trustee has confirmed in writing that, having no discretion of its own, it is not required to consider the scheme's funding level or surplus at all when the question of increases arises. Where the key power sits with the employer, trustee duty has nothing left to act on. The safeguards in the regulations therefore have to carry the full weight of member protection — and as drafted, we argued, they do not.
Employer consent cuts one way
The draft rules require employer consent before surplus is paid out. We pointed out the imbalance: the same employers who hold the power to grant pension increases — and have not used it since January 2014 — would consent to payments to themselves. We asked for written reasons, disclosure to members, and regulatory review wherever member improvements are refused.
Members who cannot reach one another
Any safeguard that relies on members responding assumes members can be informed and can organise. In our scheme they cannot: there are no member-nominated trustees, member contact details are held by the administrator and cannot be released, and the trustee has declined to circulate a neutral communication on the Association's behalf. We asked the Department to recognise that a notification window means little to members who have no way to learn a decision is being taken, and no way to respond as a body.
Settle the law first
Court decisions about historic scheme amendments — the Virgin Media line of cases, with a further judgment in Verity Trustees v Wood still awaited — could materially affect what schemes truly owe their members. Our scheme's surplus figure is stated by the scheme actuary to carry no allowance for any such adjustment. We argued that no certification under the new regime should proceed for a scheme with unresolved historic amendments until the courts have settled the position.
The tax rules could shut members out
Finally, we drew attention to an interaction the Government may not have considered. The draft tax legislation published in July 2026 makes favourable treatment of a surplus payment to members conditional on the decision sitting with the trustees. In schemes like ours, where that power sits with the employer, members may be functionally excluded from the member payment route altogether — whatever the scheme's funding position. We asked the Department to confirm whether this is intended.
All nineteen questions and the Association's complete answers, as submitted to the Department for Work and Pensions.
Download the response (PDF)
What happens next
The Government is expected to publish its response to the consultation later this year, with the regulations coming into force in April 2027. We will read that response carefully — including against the specific questions we asked — and will report to members on what changed, what did not, and what it means for our scheme. The position of pre-1997 pensioners was raised in Parliament during the passage of the Act, and at least the outline of the problem is now firmly on the record. Our submission is one more piece of that record: measured, documented, and made on behalf of the members who built the surplus this framework is about.