How much surplus will be released from UK DB Schemes?
- Charles Marandu
- Jun 27
- 3 min read
“Prediction is very difficult, especially about the future.” ― Niels Bohr
It is an often quoted statistic that UK DB pension schemes are in aggregate surplus of £160bn. However the UK Government's Department for Work and Pensions (DWP) has recently projected in its impact assessment that it centrally estimates that £11.2bn will be released from DB schemes (to sponsors, members and as tax) due to surplus reforms [1].
Is this reasonable?
Spoiler alert - £11.2bn looks a little low to us.
Crystal ball gazing is an inexact art, so what we offer is a reasoned opinion. We explain our view in the rest of this article, using our proprietary Surplus Management Framework (SMF) as a guide.
Starting Point
Firstly, we note [2] that the £160bn is specifically the low dependency surplus (at 30 Sept 24) for schemes that are already in surplus. On a buyout basis at the same date there is an aggregate deficit in the order of £140bn for schemes that are in deficit.
We look across the aggregate DB universe (ie. include all schemes) - our starting point is a low dependency surplus of £137bn. The aggregate low dependency funding level is around 112%.
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