The regulatory guidance for defined benefit (DB) pension schemes to release surplus funds cannot be ‘one-size-fits all’, Sackers partner, Tom Jackman, has said, warning that this could make the landscape very difficult for trustees to navigate, “especially in the early stages".

Speaking at the Pensions UK Annual Conference, Jackman stated that although the government has an overarching objective to release DB surplus into the UK economy, it recognised that “there has to be some safeguards prescribed by law”.

“However, there is also recognition that there won't be a ‘one-size-fits-all for that, [therefore] the government is going to make trustees the gatekeepers for surplus distribution,” he added.

As there is currently no framework for distributing surplus DB funds, and in what proportions to stakeholders, “regulatory guidance could assist with that”, Jackman suggested.

“But it's very hard to see how the regulator will prescribe that, because it's not a ‘one-size-fits-all’… it can get very complicated very fast,” he added.

According to Jackman, “the regulator has already said that [regulatory guidance will allow flexibility] to be very scheme-specific and circumstance-specific. I think that is going to make it very difficult for trustees to navigate, particularly in the early stages,” he warned.

“Different people are going to have different views on what is fair and I don't think there is a right answer. I just think it's a really tricky situation for trustees to navigate,” Jackman added.

Despite this, he stated that “this is a challenge that we should be embracing as an industry”.

“If we get this stuff right, then we're looking at a win-win. Getting surplus back to employers is good for the employers and it is usually going to involve some sort of benefit for members as well,” Jackman explained.

Industry trackers shared earlier this month showed that DB schemes' funding levels continued to improve, maintaining a £222bn aggregate surplus against long-term funding targets, up £2bn in September and £48bn year-on-year.

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