Finance Executives Split on DB Pension Surplus Use

Corporate finance leaders remain split on how to allocate DB pension scheme excess capital, a new study shows.

The research was commissioned by Independent Governance Group and carried out by Censuswide, surveying 100 CEOs, chief financial officers and senior finance executives. Its purpose was to capture current attitudes toward surplus handling in defined benefit schemes.

According to the poll, 23% of respondents believe extra funds should be directed toward scheme participants, while 21% think any refunds belong to the sponsoring company. Together these responses represent almost half of those surveyed, showing a clear division among senior finance officers.

Among those favoring a participant-focused outcome, the view is divided: 11% say the primary benefit should go to participants, and 12% support a shared approach with the employer. This split suggests many executives see merit in both protecting member interests and maintaining a partnership with the sponsoring firm.

When asked about the main value of a fully funded DB scheme, just under a fifth, 19%, chose the ability to operate on and generate excess, 18% pointed to improved outcomes for members, and 14% highlighted self-sufficiency. The remaining responses reflected other considerations such as strengthening the scheme’s financial resilience.

“Trustees are no longer solely focused on closing deficits and securing member benefits. Instead, the effective governance of excess is becoming the new priority as decision-makers manage the increasingly varied options that excess creates. This requires a completely different mindset,” said Louise Davey. “Surplus isn’t spare capital. It is the product of an investment strategy that must continue to deliver over the long term.”

Davey will discuss surplus use and DB end-game options at the upcoming Pensions Expert Annual Conference, scheduled for 9-10 November at the Fairmont Windsor Hotel.

Further details and registration information are available on the conference’s dedicated website.