Just over three quarters (76 per cent) of defined benefit (DB) pension trustees are intending to adopt the new statutory override to give themselves the power to distribute surplus, research from XPS Group has revealed.

The polling also found that 57 per cent of schemes are now more likely to run-on in order to grow and use the scheme surplus in light of the government's recent updates, which provided a clearer direction on future surplus flexibilities.

In contrast, just 7 per cent said they are less likely to do so.

XPS Group head of run-on solutions, Tom Froggett, suggested that these results should offer reassurance to the government.

"The strong support for running schemes on aligns with our previous research from May 2024, which found that 75 per cent of trustees would be willing to manage a surplus-generating run-on scheme, while 57 per cent of employers would consider doing so if a statutory override were introduced," he continued.

However, Froggett said it is interesting to compare this apparent support for the new DB surplus flexibilities with the Department for Work and Pensions' impact assessment, which estimated that the new flexibilities would lead to £8.4bn of surplus being extracted over the next ten years in a central scenario.

"We believe this significantly understates the potential of the new DB surplus flexibilities, assuming effective implementation," he warned.

"Our research suggests that the potential surplus value that could be released safely over the next 10 years could be closer to £40bn, around 5 times higher than the DWP impact assessment.

"This underlines the importance of effective implementation to ensure surplus value is maximised for both employers and members, where it is safe to do so.”

This was echoed by Insight Investment head of solution design, Jos Vermeulen, who argued that even the higher estimate in the government's impact assessment of £11.2bn is "too pessimistic".

"Only a few larger schemes opting to release surplus could exceed the assessment's projections," he emphasised.

However, Vermeulen argued that trustees and members would benefit from the reassurance that a universal PPF protection would provide.

"The DWP consultation only put forward a limited, unrealistic model for PPF protection, so we think reconsidering this should be a priority," he added.

"Such protection could dramatically increase the amount that DB schemes release and also offer reassurance of retirement security.”

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