More than three-quarters (76 per cent) of defined benefit (DB) schemes in surplus and planning to run on are yet to decide how surplus should be shared between employers and members, according to research from Aon.

The firm’s 2026 Surplus Use and Member Distribution Survey, covering 350 UK DB schemes, found that among those where a decision had been reached, 62 per cent planned to distribute part of the surplus solely to the employer, 17 per cent to members only, and 21 per cent to both employers and members.

Aon said the findings showed many schemes were keeping their options open ahead of the new DB surplus flexibilities expected from April 2027.

Among schemes in buyout surplus and intending to buyout, 50 per cent were yet to agree on how the surplus should be shared.

Of those who had decided, two-thirds intended to return surplus only to the employer, with the remainder either sharing it with members or directing it solely to members.

Aon partner in the UK endgame strategy team, James Patten, commented on the findings: “Despite 57 per cent of schemes being at least fully funded on a buyout basis - and thus generally having a surplus - the majority remain undecided around its use.

“It therefore seems that there is all to play for as schemes consider the new surplus flexibilities to be introduced next April.”

Patten noted that, for some run-on schemes, returning surplus to the employer could initially mean using it to fund expenses, ongoing DB accrual or employer defined contribution (DC) contributions.

He added that many of these positions were likely to be revisited by trustees and sponsors ahead of the 2027 changes.

For schemes heading towards buyout, Patten said the eventual use of surplus would often depend on scheme rules.

Indeed, the survey found that 50 per cent of respondents had rules under which the employer ultimately determined the use of surplus on wind-up.

Patten said the new flexibilities could therefore prompt discussions about whether some surplus above the amount needed for buyout could be distributed earlier, rather than waiting for the full buyout and wind-up process to complete.

Meanwhile, the survey also found that most schemes had not yet set a formal threshold for surplus release.

However, among those that had, 73 per cent were adopting a threshold above the low-dependency funding basis proposed as the minimum under the new framework.

Aon suggested this could include a buffer above low dependency before trustees were prepared to permit surplus extraction.

Patten added: “Where a decision has been reached, it is notable that the vast majority are adopting a threshold generally above the minimum low dependency basis proposed under the new surplus flexibilities."

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