The Pensions Regulator (TPR) could play a "leading role" in helping to promote sustainable economic growth, LCP partner, David Wrigley, has argued.

Before Christmas, regulators received a letter asking them to explain how they could contribute to the government's drive to boost economic growth, and are expected to make in-person presentations to the Chancellor, Rachel Reeves, on Thursday (16 January).

In the past, some criticised TPR for imposing an overly cautious funding regime on defined benefit (DB) pension schemes, forcing them to de-risk and move out of what is now seen as more 'productive' assets in favour of a lower-risk investment strategy, LCP said.

However, according to LCP's analysis, there is a new opportunity to promote sustainable growth, with many DB schemes now in surplus.

Rather than being primarily about how funds are invested within DB schemes, this would focus on a responsible framework for extracting surplus funds that employers can use to promote growth in various ways.

This could include funding increased recruitment, improved real wages, contributing to the defined contribution (DC) pensions of the current workforce, or using extracted funds to fund greater investment in the business.

TPR could support this process by working swiftly to produce a regulatory framework within which it could take place, said Wrigley.

"For a long time, the debate about the productive use of DB assets has focused on the investment mix within the scheme," he continued.

"But with more and more schemes now in surplus, the economy could also benefit if some surplus funds could be extracted and invested by the businesses themselves."

Wrigley also stressed the need for the government to act quickly to capitalise on the benefits of DB surpluses: "It is nearly a year since the last government published a consultation on ideas for making the best use of over £1trn in DB assets.

"The new government should respond to that consultation urgently by legislating for ongoing access to surpluses in well-funded DB schemes provided this is done responsibly."

---