I was wondering , when pondering the OBR’s estimates for the taking of surplus out of defined benefit pension schemes why they only expected less than 1% of the money in DB surpluses to make its way into the hands of employers , their shareholders, their staff or into investment in their businesses.
It is not like the Government hasn’t got an insurance policy. The Pension Protection Fund when I last looked, had a surplus of more than £14bn against the pensions it is due to pay – it’s liabilities.
I suspect that the new business officer for the PPF is not the most enviable job when you’re after schemes that have lost the support of a sponsor. But there’s another PPF out there , one waiting to be the wicketkeeper collecting all the balls that go past the bat. I was a wicket keeper and I know it’s the great job- if you’ve got the balls!
I had expected to hear the Government make an appointment of the PPF to be given the wicket-keeping pads when the Pension Schemes Bill was announced. They weren’t and I’ve noticed that potential new business officer , Shalin Bhagwan has been grinding his teeth over the second half of 2025, could he get a Christmas present?
Shalin – wicketkeeper?
Does Insight Investment know something?
Government policy to unlock surpluses in defined benefit (DB) pension schemes could achieve “much more”, Insight Investment says.
The asset management firm said HM Treasury’s Budget forecasts, published yesterday (26 November), showed the UK was “overlooking a major chance to boost growth, support businesses and millions of people and generate significant tax revenues” as well as to strengthen long-term gilt market stability.It said that, while there was an estimated £200bn sitting in DB surpluses, HM Treasury only expected taxes of around £500m from surplus release over the next five years – a number it said was “startlingly low” in comparison to a potential tax take of £50bn.
I have seen a lot of argument on this blog since when we coined the term “ephemeral” of pension scheme surpluses. I think it’s Con’s term but it led to an article in the FT which led to a blizzard of comment. You can read the second of two ephemeral blogs here.
Mary McDougall was bringing the debate between cautious trustees (and employers behind them) and their wish to see pension surplus money back in economic circulation and not in the queue for annuitisation.
That was back in February and here is Insight’s Jos Vermeulen in this week’s Professional Pensions
“But the fix that would truly unlock this opportunity is simple: increase PPF protection to 100% for DB schemes that follow regulatory investment guidelines. This would give trustees complete confidence that members’ pensions are secure – even in a worst-case scenario.”
He added:
“With these recent changes, the step to full PPF protection is even smaller, and the costs and risks would be far outweighed by the benefits. It’s time to think bigger.”
I suspect that the Treasury are having a little pressure from the insurers who want to keep the end-game to themselves.
It is not just the PPF who want a bit of the action, there’s growing pressure from the market for us to see superfunds supporting the release of surplus to employers and staff. Those superfunds may go a little further than Clara – which is in effect- a bridge to buy-out. I suspect we will see some interesting deals emerging over the next few months.