Statement by co-chairs of Inclusive Framework on BEPS indicates still no consensus on Pillar One
There has been a growing anticipation in the pensions sector for reforms that would address the practical barriers preventing the release of pension surpluses. The Government acted to reduce the tax on such releases from 35 percent to 25 percent from 6 April 2024. Historically, many DB schemes have been restricted by specific rules that prohibit refunding surpluses to employers before a full buyout and wind-up are complete. Additionally, section 251 Pensions Act 2004 has posed challenges, as many schemes lost the power to refund surpluses if they did not make a trustee resolution by April 2016.
Most Corporate Pension DB Schemes have been closed to new members for many years and therefore, as time expires, the projected surplus should become more certain and Trustee concerns about release of surplus more manageable.
Accessing the Pension DB Scheme surplus, whether by taxable payout of surplus or, e.g. a loan from the DB scheme to the employing group, can enable Groups to use funds more efficiently, e.g. pay down debt, fund investment etc.