The majority (93 per cent) of UK businesses with closed defined benefit (DB) pensions schemes larger than £500m plan to request access to surplus once government rules are amended, research from Brightwell has revealed.

This follows government analysis revealing that DB schemes now hold a combined £160bn surplus, largely due to recent improvements in funding levels.

In response to these increased levels, the government has announced plans to introduce reforms - set out in the upcoming Pension Schemes Bill, expected before the summer recess - which will make it easier for employers to access surplus funds from well-funded DB schemes.

The Department for Work and Pensions reiterated earlier this month that member protection will remain a priority, with trustees continuing to play a key role in safeguarding the interests of beneficiaries.

Ahead of these changes, Brightwell found that almost half (43 per cent) of the financial decision-makers surveyed would want to access scheme surplus in the ‘near term’, while 27 per cent said they would request access immediately, 16 per cent said in the medium term and 7 per cent in the longer term.

In terms of how they plan to use the funds, 49 per cent indicated they would reinvest in UK operations, supporting the government’s objectives to boost the economy, and 44 per cent intend to share it with members of the DB scheme.

Additionally, 42 per cent plan to reinvest in global operations and 40 per cent would distribute the funds to shareholders.

Some respondents indicated they would use the surplus to support their defined contribution (DC) scheme, with 33 per cent saying it would be used to cover costs and expenses associated with running their DC scheme, while 22 per cent said they would use it to fund contributions to its DC scheme.

Meanwhile, 33 per cent said that having easier access to surplus would encourage them to run the pension scheme on for longer rather than opting for a buyout with an insurance company and 63 per cent said it would encourage a more return-seeking investment strategy to help generate future surplus.

The research also showed a shift in mindset from companies viewing a DB pension scheme as an asset (33 per cent) rather than a liability (28 per cent), with Brightwell crediting this shift to the proposed government changes providing incentives for employers to run their schemes on rather than buy them out with an insurer.

One in five (20 per cent) said they can see that the pension scheme has the potential to be an asset but comes with too much management and risk, while 19 per cent said their pension scheme is always something they have managed closely and want to retain control over.

Brightwell CEO, Morten Nilsson, said that up until now, UK businesses had full responsibility for the downside of their DB pension schemes but no access to the upside.

He indicated that the proposed government changes would introduce some “welcome symmetry” into the equation and provide a “clear incentive” for employers to run their pension schemes on rather than buying them out with an insurer.

However, he warned that for the changes to succeed, “care needs to be taken”.

“Surplus should only be released where schemes are sufficiently well-funded and trustees are satisfied it is safe to do so,” he continued.

“A gradual release would be the most prudent approach to prevent any regret risk. Running on a pension scheme isn’t without challenges so having the right investment strategy and expertise is key.”

Pensions and Lifetime Savings Association (PLSA) director of policy and advocacy, Zoe Alexander, noted that the funding position of DB schemes has “rarely been stronger”, calling this a “great boost” for the members of those schemes.

Alexander said that schemes must continue to monitor the global economic situation carefully given current uncertainties, to minimise risks to those surpluses.

"Where they have sufficient confidence, surplus release by schemes provides an opportunity to improve member benefits, boost DC pension contributions, and support new types of investment,” she continued.

“It must be accompanied by strict controls to protect member benefits.”

She added that the PLSA is supportive of the measures in the forthcoming Pensions Schemes Bill to provide a clear legal and regulatory framework for surplus release.

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