Government paves way for routine DB surplus 'Christmas bonuses' for pensioners - Steve Hodder, LCP
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The Government will enable well-funded DB pension schemes to pay surplus funds directly to scheme members over the normal minimum pension age, where scheme rules and trustees permit it, from April 2027. Currently, most DB schemes looking to share surplus with members provide additional increases to pensions. This is off-putting for some sponsors, as it adds to the level of DB risk they underwrite. A move to allow schemes to pay simple additional lump sums to pensioners (without current penal tax charges) is expected to make it easier for many large schemes to share DB surpluses with members.
Steve Hodder, partner at LCP said:
“This is great news, and confirms the government's continued commitment to helping well-funded DB schemes better support their members, sponsors and the wider UK. Creating a culture of routine "Christmas surplus bonuses" removes one remaining hindrance from company sponsors sharing surpluses, and is likely more highly-valued by many members."
