Pension Schemes Bill returns to Commons as DB reforms aim to shift employer behaviour

The Pension Schemes Bill has returned to the House of Commons for consideration of Lords amendments, marking the next stage in its legislative progress before it moves back to the Lords in the usual “ping pong” process ahead of Royal Assent.

The Bill includes provisions around surplus refunds in defined benefit (DB) pension schemes, which are intended to shift how employers view and manage these schemes over the long term.

David Brooks, head of policy at Broadstone, said: “The inclusion of surplus refund provisions in the Pensions Bill should be understood first and foremost as an attempt to reset how employers view DB pension schemes.

“At its core, this is about encouraging sponsors to see DB schemes as long term assets rather than stranded liabilities, and to have the confidence to support them on that basis.

“By reducing the perceived ‘dead end’ risk of surplus capital, the government is creating space for schemes to invest more productively, including through long term UK assets that support growth and economic resilience.

“That strategic objective matters far more than the question of whether surplus refunds are ever actually taken.”

He added: “There are, of course, ancillary benefits. Schemes that are better funded and more comfortable running on are more likely to grant discretionary increases in members’ favour and to make trustee decisions that improve member outcomes.

“Equally, keeping schemes open to a wider range of assets reduces the pressure for consolidation preserving trustee control.