CFOs cautious about ‘windfall’ approach to pension surplus

Corporate pension decision-makers largely agree on the need to retain a surplus buffer but are divided over how any surplus should be used.

Our latest report, The Pensions Balancing Act, reveals that a majority (67%) of pension decision-makers believe in retaining a buffer above the legal minimum before surplus is used or distributed. This includes 21% who believe schemes should remain fully funded on a buyout basis.

However, this consensus did not extend to how the surplus should be used. The most common response was that it should support the employer (21%). However, a greater number believed members should benefit in some form. 12% said the surplus should be shared between members and the employer, while 11% said it should primarily benefit scheme members. While CFOs see surplus as a potential source of value for the employer, many are also understand the opportunity to improve member outcomes, strengthen scheme resilience and enhance benefit security.

The lack of consensus was also evident when decision-makers considered the wider value of a fully funded scheme. The most popular option, selected by 19%, is the ability to run on and generate additional long-term value, closely followed by improving member outcomes (18%). A further 14% value the ability for the scheme to become self-sufficient on a cost basis.

No single idea emerged as dominant, underscoring the uncertainty among sponsors whose schemes now hold significant surpluses. Decision-makers see value in a wide range of outcomes, from generating future value and improving member benefits to creating a self-sufficient scheme. This variety reinforces the need for each scheme to determine how surplus can best support its long-term objectives.

Louise Davey, Head of Policy and External Affairs at IGG, said:

“Trustees are no longer solely focused on closing deficits and securing member benefits. Instead, the effective governance of surplus is becoming the new priority as decision-makers navigate the increasingly varied options that surplus creates. This requires a completely different mindset.

“Surplus isn’t spare capital. It is the product of an investment strategy that must continue to deliver over the long term. Decisions should begin from this logical starting point. Every scheme will have a nuanced picture of how its surplus was generated, so there is no one-size-fits-all approach. While market conditions have improved, CFOs shouldn’t become complacent. Surplus can quickly disappear if we aren’t diligent guardians and don’t make decisions that preserve the scheme’s health and long-term value. Good governance is the only way to ensure all potential value is realised for sponsors and members.”

Read the full report to learn more about the findings.

Methodology: IGG commissioned Censuswide to survey 100 UK CEOs, CFOs and pension decision-makers to assess their views, experience and strategies with regards to their current pension schemes. The data was collected between July 3^rd and July 7^th, 2026. DB-specific findings are based on the 73 respondents whose organisations are the sponsors of DB schemes. Censuswide is a member of the Market Research Society (MRS) and the British Polling Council (BPC), and a signatory of the Global Data Quality Pledge. It adheres to the MRS Code of Conduct and ESOMAR principles.

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