Pension scheme members “afraid” of Government plan to “extract” cash for employers – poll

Members of defined benefit (DB) pension schemes fear that Government plans to allow employers to “extract” cash from their schemes put their retirement at risk, new polling reveals today.

The polling, by Pension Insurance Corporation plc, the specialist insurer of UK DB pension schemes, reveals that many of the 8.8 million people who still belong to DB pensions – sometimes known as final salary schemes – feel the Government’s plans could jeopardise their incomes in later life.

The vast majority of DB pension members – 94% - say they don’t want politicians interfering with their pensions.

Ministers are drawing up plans to allow the companies that sponsor DB pension schemes to receive “surplus” cash from those schemes, saying this could unlock new investment in the economy. However, early evidence from companies getting access to surplus money shows they are more likely to pass the funds to their shareholders.

The “surplus” cash in many DB schemes is also a relatively recent phenomenon, that began in the summer of 2022.  Prior to that many DB schemes were in deficit for most of the previous 15 years.

The prospect of funds being removed from their pension schemes worries many DB members, the polling of 1,000 members reveals. In the survey, 60% of DB members said they fear that the Government’s plan would create risks for them and other members. When asked about the purpose of pension assets, 56% of DB members said they want money in their scheme to benefit them, not be given to employers.

The original Government consultation on the surplus extraction policy says: “Any extraction of surplus will reduce security for members.”

But the polling shows that security is extremely important to pension scheme members: 

• 96% say certainty about the level of their pension over future years is “very important”, or “important”
• 96% also say that having secure pension income not affected by financial markets is “very important” or “important”
• older members – those with most to lose if things go wrong - are consequently overwhelmingly opposed to surplus extraction: 70% of over 55’s oppose extraction

There is very strong opposition to politicians having a role in DB pensions: 

• 94% say it is important that “politicians can’t interfere with my pension”
• only 8% of members trust politicians to take decisions that affect their pension incomes

By contrast, DB members have very high trust in scheme trustees:

• 90% say it is important that “trustees look after my pension, meaning employers can't get access to the money in the scheme”

Tracy Blackwell, CEO of PIC, said: “We think the views of DB members, many of them elderly, many of them classified as vulnerable, should be properly considered in any decision about a policy that the Government’s own document says would reduce the security of their pensions. So far, their voices have been entirely absent in this debate.

“What this polling shows for the first time is that many of the people who rely on a DB pension are afraid of changes that could make their pensions less secure. It took a long time to build up a legal regime for DB pensions that puts members first, after the scandals of the 1980’s and 1990’s. Members are clearly concerned at the prospect of these vital protections being watered down and I would advise them to write to their MP about these proposals.

“Finally, it is right for us to acknowledge that like all the other participants in this debate, PIC has an interest in the outcome. We take on DB schemes and pay the pensions of 400,000 people, and have paid more than £16 billion to our pensioners so far. Our view is that it is fundamentally right that members’ benefits are fully secured before the sponsoring employer gets any cash back – a position which should align everyone’s interests. Minsters need to be very careful with this issue given that this is about the financial wellbeing of generally older, and potentially vulnerable, people.”

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Notes to Editors:

1)      The survey was conducted by Censuswide among a sample of 1,000 Defined Benefit pension scheme members- UK targeting (18+). The data was collected between 03.03.2025 - 10.03.2025

2)      About DB pensions (data from the PPF’s “Purple Book 2024):

        i.      8.77 million people are members of private sector DB pension schemes.

                1. 4.07 million of them are retired and receiving a DB pension

                2. 4.05 million are yet to start receiving their DB pension

                3. 700,000 people are still “active members”, still accruing benefits within an open DB scheme, primarily within the Universities Superannuation Scheme (“USS”), and the Railways Pension Scheme

        ii.      There were 4,974 private sector DB schemes in 2024, with assets worth £1.167 trillion, compared to 7,751 schemes in 2006 with 14 million members

3)      About the Government consultation:

        a.     Paragraph 32 begins: “Any extraction of surplus will reduce security for members. In establishing a new basis to permit surplus extraction we need to ensure there remains a very high probability that member benefits will be paid in full.”

        b.     The consultation is available at: Options for Defined Benefit schemes - GOV.UK

4)     For background on “The Devices Businesses use to Exploit Surpluses and Shed Deficits in Their Pension Schemes”, please see: MilkingAndDumping.pdf

For further information please contact:

PIC
Jeremy Apfel             
+44 207 105 2140
apfel@pensioncorporation.com

Apella Advisors                                
James Kirkup             
+44 7815 706 601
jk@apellaadvisors.com

About PIC
The purpose of PIC is to pay the pensions of its current and future policyholders. PIC provides secure retirement incomes through comprehensive risk management and excellence in asset and liability management, as well as exceptional customer service. At year end 2024, PIC had insured 400,000 pension scheme members and had a portfolio of £50.9 billion, accumulated through the provision of tailored pension insurance buyouts and buy-ins to the trustees and sponsors of UK defined benefit pension schemes. PIC has made total pension payments of £16.2 billion to its policyholders and has invested £13.8 billion in UK private investments, including housing and infrastructure, creating considerable social value. Clients include FTSE 100 companies, multinationals and the public sector. PIC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority (FRN 454345). For further information please visit www.pensioncorporation.com