DB surplus – how should trustees decide what to do?

Often, it is the trustees who have a discretion under a scheme's rules to distribute a surplus to an employer. And this will certainly be the case for any trustees taking advantage of the new DB surplus provisions in the Pension Schemes Bill, which will (when enacted) allow trustees to amend their rules to grant themselves a discretion to distribute surplus to employers.

Much of the initial commentary on the draft Bill has suggested trustees should look to 'strike a deal' in return for a release of surplus to a scheme employer, for example, by augmenting scheme benefits. However, case law makes clear that it is not necessarily the trustees' duty to do that.

In this briefing we explore how trustees should go about making a decision on the return of surplus and some of the factors trustees will want to take into account when making that decision.

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