There is strong industry backing for the government's plans to introduce default retirement income solutions and make defined benefit (DB) surplus rule changes, research from Sackers has revealed.

The survey showed that over a third (36 per cent) of respondents supported the introduction of default retirement income solutions, with a further 23 per cent opting for surplus changes.

These areas of policy focus were top of the priority list, receiving more support compared to issues such as value for money (VFM), deferred pots consolidation, 'megafunds' or 'superfunds'.

Sackers partner, Janet Brown, agreed that surplus is one of the more interesting areas of the bill, suggesting that trustees and employers may wish to use the time between now and 2027, when the new trustee resolution flexibilities are due to come into force, to plan ahead and agree their approach on how they would use surplus.

"As we noted in the webinar, many clients are already being innovative and imaginative in planning for the use of surplus, including how to do so without necessarily intending a full 'release' of a DB surplus (less tax) back to the employer as part of that scenario," she said.

"Even though surplus is clearly back in fashion, in our view, these changes won’t move the dial significantly and they certainly won’t result in the return of £160bn to employers and UK plc, which the government’s press release quoted on 5 June, at least not any time soon.

"We would really like to see the government allowing one-off lump sum authorised payments to members, which we know it is considering, as we think this could have a real impact in unlocking negotiations over surplus.”

Reid suggested that there is also more to be done ahead of the proposed changes for default retirement income solutions, which will introduce a new trustee duty to design and implement solutions from 2027.

"Everyone has work to do here, whether you already have a solution and need to check how it will meet the new requirements, or if you don’t and will need to start from scratch," she stated.

However, she clarified that Sackers has been advising clients to focus on the VFM changes and retirement income solutions first because these are the cornerstones of the government’s drive for consolidation.

"But it’s also important to monitor the megafunds and asset allocation proposals because these will affect schemes indirectly," she added.

"Above all, we think it’s crucial to consider DB and defined contribution (DC) arrangements holistically because of the link to DB surplus policy and its potential use for DC contributions.”

However, Reid also echoed broader calls for change, arguing that "what’s missing from the Pension Schemes Bill is anything on fiduciary duties and improving member outcomes".

"Unless we tackle the fundamental issue of adequacy and getting members to save more for their retirement, we are in danger of missing the point," she said. "We need to be bolder as an industry about getting adequacy higher up the agenda.”

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