Aviva’s £15bn defined contribution (DC) master trust has launched a service to make it easier for defined benefit trustees to use surplus assets to top up DC benefits, ahead of the expected introduction of surplus sharing rules next year.
The Pension Schemes Bill contains proposals to allow trustees to change defined benefit (DB) pension scheme rules to enable the release of surplus assets in certain circumstances, to be paid to pension fund members or sponsoring employers.
Aviva announced today (15 December) that it had launched a new service to enable DB surpluses to be transferred into its master trust, so that master trust clients with DB schemes can enhance other members’ benefits.
The financial services giant said in a statement: “Where trustees have a plan to secure member DB benefits, unlocking surplus can deliver significant benefits, helping schemes progress towards wind-up, giving employers tax-efficient access to capital, and enhancing DC benefits for members – supporting stronger retirement outcomes and future financial security.”
A survey by XPS conducted earlier this year found that three-quarters of trustees were open to using the proposed surplus release powers. The government recently announced an adjustment to the tax regime, allowing one-off payments to pension scheme members from surpluses without a punitive tax bill.
Geoff Marchment, head of master trust development at Aviva, said surplus flexibilities “can benefit employers, trustees and DC scheme members”. John Smitherman-Cairns, commercial director of bulk annuities, added: “Where trustees have secured the funding needed to guarantee the benefits of DB scheme members, either through buyout, buy-in or run-on, this forward-thinking solution allows trustees to re-deploy surplus funding to support the retirement plans of DC members.”
