Nigel Cayless comments on what DB schemes can do with surpluses

Senior Counsel Nigel Cayless is quoted in an article in Pensions Expert on the issues DB schemes face when dealing with surpluses. The article reports on the DWP’s recent consultation on scheme surpluses, which proposes a “statutory override” to allow trustees to share surpluses subject to appropriate funding levels. However, the issues schemes face when dealing with funding surpluses do not necessarily align with the aim of encouraging trustees to invest in “productive finance”. Nigel notes that for pensions schemes to run on and feel they can carry 100% of the funding risk, it also means that they are comfortable with allowing surplus to build in the first place. He warns: “if employers can’t easily extract surplus, then this is likely to make them wary of the risk of overfunding and trapped surplus, which might translate to an aversion to risky growth assets or productive finance”.

Read the entire piece in Pensions Expert, here.