Chancellor, Rachel Reeves, is expected to reveal a range of initiatives to promote economic growth later this week, including plans to make it easier for sponsors of defined benefit (DB) pension schemes to access surplus funds, Sky News has reported.

According to the reports, Reeves is set to announce that she wants to change DB surplus rules to boost investment in the UK economy, with government sources suggesting that this could unlock more than £60bn of pension surpluses held in DB schemes.

At present, surplus funds can generally only be extracted when a scheme winds up, and the exact rules about how this can be done and who benefits from the surplus vary from scheme to scheme.

However, the government previously held a call for evidence around how DB pension schemes could increase the amount invested in productive asset classes, with industry responses at the time suggesting that changes to DB pensions surplus rules could generate £100bn for companies and pension scheme members by 2034.

Industry experts have since expressed disappointment that the proposals had not yet been taken forward, arguing that the government should consider tapping into the DB pension market alongside its recently announced defined contribution (DC) and Local Government Pension Scheme (LGPS) reforms.

But despite the support for potential surplus rule changes, industry experts have emphasised that trustees will need to be confident that member benefits will not be put at risk.

Indeed, LCP pointed out that it is yet to be seen what accompanying measures will be implemented to protect scheme members, nor what role trustees will take in permitting the release of any surplus.

LCP partner, Steve Hodder, said: "It is very welcome that the government is looking seriously at allowing greater flexibility for well-funded DB pension schemes.

"These schemes collectively offer vast potential to further support not only their own members and their sponsors, but also the UK economy.

"The key to success will be to ensure comprehensive protection of member benefits to give trustees the required confidence.

"One route which would ensure all well funded schemes could access these new freedoms would be a 100 per cent underpin from the Pension Protection Fund, subject to certain conditions.

"But time is of the essence, and the government needs to give a clear sign now to schemes that this is on the agenda, otherwise final decisions will be made and the opportunity will be missed’.

The government is also expected to share its broader response to the Work and Pensions Committee's DB pension report, as Secretary of State for Work and Pensions, Liz Kendall, recently told the committee that the response would be shared "in the new year".

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