Aviva has launched a solution within its master trust designed to enable defined benefit (DB) pension scheme trustees and employers to transfer surplus funds into defined contribution (DC) arrangements.

The provider said the solution would offer a secure and compliant mechanism for deploying surplus capital where trustees have a plan in place to secure DB member benefits, including through buy-in, buyout or run-on strategies.

It added that unlocking surplus in these circumstances could help schemes move towards wind-up, provide employers with tax-efficient access to capital, and enhance DC benefits for members, supporting improved retirement outcomes.

The flexible solution is available to both new and existing Aviva master trust clients whose DB schemes are in surplus, subject to individual scheme rules.

Looking ahead, Aviva suggested that forthcoming legislation, following the Pension Schemes Bill, could make surplus transfers a realistic option for some schemes earlier than previously anticipated.

Aviva head of master trust development, Geoff Marchment, argued that unlocking DB surplus has the potential to create value for all parties involved, from employers and trustees to DC savers.

He said the new solution was designed to help schemes, working alongside their advisers, redirect surplus capital in a tax-efficient way to improve member outcomes, while reflecting how the Aviva master trust is evolving in response to a changing pensions landscape.

Aviva, commercial director of bulk purchase annuities, John Smitherman-Cairns, added that once trustees have put funding arrangements in place to fully secure DB member benefits, whether through buy-in, buyout or run-on, the solution provides a "practical route" to repurpose surplus assets.

He said this enables trustees to support DC members' retirement savings without compromising the security of DB benefits.

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