XPS welcomes new DB surplus reforms to move from principles to practicalities

XPS welcomes new DB surplus reforms to move from principles to practicalities

11 Jun 2026

On 10 June 2026, the Department for Work and Pensions (“DWP”) published draft regulations and a consultation around the new surplus flexibilities for DB schemes. Alongside this, The Pensions Regulator (“TPR”) published its own statement on the new surplus flexibilities. 

Commenting on the publications, Tom Froggett, Partner and Head of DB Run-On at XPS, said: “We welcome the principle of allowing well-funded DB schemes to release surplus for the benefit of members and employers, provided that appropriate guardrails are in place. The draft regulations, DWP consultation and TPR statement are all important milestones in making this a reality by April 2027. The broad principles of the DWP consultation are as expected, but draft regulations now take us beyond the principles and firmly into the practicalities. A key consideration will be separating out the assessment of the level at which surplus is released from the actual mechanism of releasing surplus - in particular, it is crucial that the conditions around surplus release provide high levels of protection for members without making the actual mechanism for payment too onerous.”

“In addition to the regulations, a further key aspect of the new surplus flexibilities will be guidance from The Pensions Regulator (“TPR”), which is expected to be consulted on later this year and which will build on the statement put out by TPR yesterday. This guidance will be crucial in giving trustees a clear blueprint for releasing surplus. It is one thing for the new regulations to create the legal means for releasing surplus, but quite another thing for trustees to be comfortable in agreeing to this, and rightly so. Trustees will need to consider a range of factors such as funding buffers, investment strategy, downside protections and upside for members. Overall, where the circumstances are right to do so, this is about putting in place an overall package that works for employers, trustees and members.”