Nearly half (45 per cent) of pension professionals have indicated that about half of schemes they are advising on a potential transaction expect a material surplus of 5 per cent or more, research from the Society of Pension Professionals (SPP) has suggested.

Meanwhile, nearly a third (32 per cent) of those polled chose more than half, 22 per cent said a minority, while 1 per cent chose none.

This comes after the government's announcement earlier this month regarding plans to provide new freedoms for the safe release of surplus funds, allowing for investments and benefiting savers.

Participants were asked to identify what they think is the most important factor for trustees to consider if they were given the power to distribute surplus.

The majority, 39 per cent, indicated that ensuring members receive their promised benefits in full through a buyout is the key priority.

Over a third (36 per cent) of respondents said the most important factor for trustees to consider was a source of surplus – predominantly employer/member contributions, while 13 per cent said that it was if the employer has taken a “downside” risk of underfunding.

The polling also indicated that 8 per cent of respondents believe that member needs (e.g. not enough inflation protection) are the most important factor for trustees to consider, 3 per cent said previous practice regarding discretionary benefits and 1 per cent said employer’s financial position.

Commenting on the findings, Capita Pension Solutions director of de-risking, SPP member and chair of the event, Colin Parnell, said: “It was good to see that the majority of attendees whose schemes are heading for wind up might expect a material surplus.

“It was also fascinating to find the broad range of opinions as to what is viewed as the most important factor for trustees to consider when determining the destination of the surplus.

“As expected, securing existing member benefit promises was the top priority, but most employers will be happy to see that their considerable contributions over the years are also given a very high weighting.”

He noted that with many schemes in surplus and headed for wind up, it’s “clear” that the practicalities of surplus distribution will be “front and centre” of many trustees’ minds in the months and years ahead.

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