It’s good to see a volte-face from a firm of consultants that has been rock-hard supporters of buy-in and buy out since schemes swung back from deficit and into buy-out territory.
But this Bill has been on their desks these last 9 months and surpluses have been with their DB clients considerably longer. So why this lecture this week? Let’s repeat that headline!
Here is the article! David Brooks is a good man
As the bill returns to the Commons today (15 April), continuing the legislative process, Broadstone head of policy David Brooks suggested the inclusion of surplus refund provisions in the bill“should be understood first and foremost as an attempt to reset how employers view DB pension schemes”.
Last year, the government said it would enable well-funded DB 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.
Brooks noted, 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”.
He added:“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.”Brooks continued:
“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.
“But those outcomes are consequences, not the primary goal. The real prize is changing behaviour: giving employers a reason to stay engaged with their schemes, back long-term investment, and treat DB pensions as part of the solution rather than a problem to be offloaded.”
Welcome to the party David Brooks, it is good that Broadstone that looks after so many small schemes is moving on from insured buy-out as the Golden Standard.