DB surplus flexibilities: Law Debenture's consultation response

The consultation on DB surplus flexibilities closed on 2 September 2026. Law Debenture submitted a detailed response covering eight of the nineteen consultation questions - the ones where we had something distinctive and substantive to say as a trustee body.

Our perspective is shaped by experience. We hold trustee appointments across approximately 141 pension schemes, representing over £317 billion in assets. We are structurally independent from investment management, actuarial, covenant and administration services. That independence is not incidental - it is the foundation of the judgement this policy demands.

The regulations are broadly well-designed

The move to a low dependency threshold, actuarial certification, the forward-looking test, and the notification requirements are all proportionate and workable. We support the architecture and welcome the direction of reform.

But the regulations tell trustees when surplus release is permitted. They do not tell trustees whether it is appropriate - or on what terms. That fiduciary judgement is inherently scheme-specific. It cannot be reduced to a regulatory checklist or supplied by an actuarial certificate alone.

The threshold is a floor, not a target

Low dependency is the minimum condition for surplus release - not a proxy for the right outcome. The real fiduciary judgement begins where the regulations end: how much buffer above the threshold is right for this scheme, at this time, given its covenant, maturity and long-term objective?

Low dependency also means different things for different schemes. It is calculated by reference to each scheme's own funding and investment strategy. It is not a uniform standard, and neither members nor employers should read it as one.

The 'can' versus 'should' distinction matters

The actuarial certificate establishes the regulatory gateway. It does not supply the fiduciary judgement. Trustees must ask not merely whether they can release surplus, but why - as trustees of this scheme, at this time, in these circumstances - they are doing so. That analysis requires depth of expertise, genuine independence, and integrity to follow wherever it leads.

The new framework redistributes rather than removes the fiduciary burden. Trustees who release surplus below buyout funding levels will need to explain why that was a proper exercise of their powers. That is not a lighter bar. It is a higher one.

Let trustees do their job

We have made a direct plea to TPR: provide principles-based guidance that reinforces the fiduciary framework, rather than a framework that substitutes regulatory expectation for independent judgement.

We are also asking TPR to be mindful that its guidance shapes member expectations as well as trustee behaviour. Framing that anchors expectations around surplus sharing - before any scheme-specific conversation has begun - makes the trustee's role harder, not easier. We would welcome the opportunity to share our practical experience with TPR as it develops that guidance.

Two specific asks on the regulatory detail

Beyond the headline positions, we have raised two specific points:

On phased release - the process as designed suits a single large payment better than a programme of smaller, lower-risk releases. The lower-risk approach - drip-feeding surplus out, potentially via an escrow arrangement - should be the path of least resistance. We ask DWP to consider whether a single member notification could cover a defined programme of scheduled releases, with each payment still subject to full certification and trustees retaining an unfettered power to suspend.

On governance and transparency - the 2006 Regulations gave members the right to request a copy of the actuarial certificate. The draft 2027 Regulations remove that right without explanation. We ask DWP to reinstate it. The certificate should also show the underlying asset and liability figures, not just the actuary's opinion - as was required under the 2006 Regulations.

What comes next

TPR will consult on its full guidance later this year. That guidance will determine whether trustees - and the employers who work with them - believe the surplus release process is worth engaging with. We will respond to that consultation, and we would be happy to discuss any of the issues raised in our response with clients, contacts and policymakers.

Read Law Debenture's full response here. 

Do reach out to Sankar Mahalingham to find out more about our approach to trusteeship and governance.