The Prime Minister and Chancellor met with business leaders last week and unveiled proposals to give occupational defined pension schemes more flexibility.
Restrictions will be lifted on how well-funded, occupational defined benefit pension funds that are performing well will be able to invest their surplus funds. It is hoped that this will pave the way for future growth across the economy.
Currently, around 75% of such pension schemes are in surplus amounting to £160 billion. However, restrictions have meant that businesses have found it difficult to invest these funds, even when both trustees and sponsors want to do so.
The proposals will allow trustees, if they agree, to share a portion of the scheme surplus with a sponsoring employer. The employer can then choose to invest the funds in its core business and/or provide additional benefits to members of the pension scheme.
Jonathan Lipkin, Director of Policy, Strategy & Innovation at the Investment Association said: “With the right guardrails in place, the government’s proposals could help channel more funding into the economy, by enabling schemes to invest more widely and take on greater risk, while allowing for members to receive an uplift to pension benefits.”
See: https://www.gov.uk/government/news/pension-reforms-to-go-further-to-unlock-billions-to-drive-growth-and-boost-working-peoples-pension-pots
The Office for National Statistics (ONS) reported last week that the annual inflation rate for August 2025 was 3.8%, unchanged from July.
From April, people drawing the state pension may see an increase of more than £500 a year, thanks to the government’s triple lock guarantee. The policy means the pension rises each year by whichever is higher: 2.5%, inflation, or average wage growth.
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