Two pension organisations have called for greater flexibility in the surplus sharing framework. Among others, they hope to make phased payments easier and call for clarity where payments are delayed for a long time, as well as on whether members can influence the timing of payments. 

Surplus sharing is due to be available next year, and a Department for Work and Pensions consultation on the draft Occupational Pension Schemes (Payments to Employer) Regulations 2027 closes on 2 September. 

The Society of Pension Professionals has welcomed the draft framework for sharing pension scheme surplus in its response. It agrees that low dependency should be the minimum funding test, and that decisions on the level of surplus released should remain with trustees, taking account of scheme-specific circumstances and covenant strength. 

However, it would like to see changes to "make the regime more practical, particularly for schemes intending to remain on a long-term run-on basis", arguing that the draft process is geared towards one-off payments.  

Jon Forsyth, chair of the SPP’s DB Committee, said: “Greater flexibility around regular and phased payments, the actuarial tests and payment timetable would help ensure the new framework delivers its intended benefits without creating unnecessary governance burdens or other unintended consequences.”   

The regulations should allow trustees to release less than the provisional amount without restarting the process, the SPP says. 

It also calls on the DWP to extend the proposed five working-day period between actuarial certification and payment, and believes the suggested three-year forward-looking actuarial test should be more closely aligned with existing actuarial certification requirements. In addition, the SPP would want to align pensions and tax legislation for segregated schemes, saying current uncertainty could delay legitimate surplus returns.  

The Pensions and Administration Standards Association has also published its response, pointing to several areas where further clarity is needed – such as whether a change in the actuarially certified amount from what was previously notified to members would trigger a new notification period. 

Other practical questions include when to tell the Pensions Regulator, particularly where a payment is deferred for many years. 

PASA is also suggesting having a de minimis threshold, warning that relatively small entitlements might otherwise need to be administered for extended periods where a member has not reached the minimum pension age.  

PASA says it does not expect the proposed arrangements for employer surplus payments to create significant operational concerns, but is pointing to a number of circumstances where more details would be helpful. 

For example, having the payment of surplus share deferred raises issues around member communications, PASA highlights. The association would like answers to questions such as when people should be reminded of their surplus payment, whether the entitlement to a delayed share of surplus should be mentioned regularly, if it needs to be shown on benefit statements or the pensions dashboards and if so, how. 

In addition, PASA says there could be tax or benefit consequences from paying extra money to members. "The regulations should therefore make clear whether members can defer, decline or otherwise influence the timing of payment, so administrators know how any such member requests should be treated," it notes in its consultation response. 

Greater detail is also needed on what happens to a deferred entitlement in "a range of circumstances" that can affect people, including: where a member dies before receiving the payment; where a member has a protected pension age; on transfer – eg, if the entitlement transfers or stays in the old scheme; and on pension sharing or earmarking.