Budget 2026 · Explainer Background: published before the Budget
Draft rules would let defined benefit pension schemes pay surplus to members
A new authorised payment would let trustees pay money from a pension scheme's surplus direct to eligible members. The payments would be taxed as pension income, and the rule would apply to payments made on or after 6 April 2027.
Key facts
Each row is checked against the stored copy of the official document; open a row to see the exact words and where they appear.
| Fact | Value | Applies to | Source |
|---|---|---|---|
| The measure creates a new kind of authorised payment to members from registered defined benefit occupational pension schemes. | Defined benefit occupational pension schemes | Quote and locationThis measure introduces a new authorised member surplus payment from registered defined benefit occupational pension schemes. Source: Defined benefit pension scheme surplus payments to members, line 2 — Open the official document (opens in a new tab) · Our archived record | |
| Trustees would be able to make discretionary payments from scheme surplus. | Scheme trustees | Quote and locationIt allows trustees to make discretionary payments direct to eligible members from scheme surplus Source: Defined benefit pension scheme surplus payments to members, line 3 — Open the official document (opens in a new tab) · Our archived record | |
| Payments to eligible members would go direct to them. | Eligible members | Quote and locationdiscretionary payments direct to eligible members from scheme surplus Source: Defined benefit pension scheme surplus payments to members, line 3 — Open the official document (opens in a new tab) · Our archived record | |
| The payments would be taxed as pension income. | Tax treatment of surplus payments | Quote and locationwhich will be taxed as pension income Source: Defined benefit pension scheme surplus payments to members, line 3 — Open the official document (opens in a new tab) · Our archived record | |
| The rule would apply to payments made on or after 6 April 2027. | 6 April 2027 date (from) | Start date | Quote and locationThis will apply to payments made on or after 6 April 2027. Source: Defined benefit pension scheme surplus payments to members, line 3 — Open the official document (opens in a new tab) · Our archived record |
| The government wants feedback on the draft legislation. | Draft legislation | Quote and locationThe government would like feedback on the draft legislation. Source: Defined benefit pension scheme surplus payments to members, line 4 — Open the official document (opens in a new tab) · Our archived record | |
| Feedback was due by 7 September 2026. | 7 September 2026 date (deadline) | Consultation deadline | Quote and locationFeedback should be submitted by 7 September 2026 by email: policypensions@hmrc.gov.uk. Source: Defined benefit pension scheme surplus payments to members, line 4 — Open the official document (opens in a new tab) · Our archived record |
| The measure allows defined benefit schemes to make authorised surplus payments to members. | Defined benefit pension schemes | Quote and locationThis measure allows defined benefit pension schemes to make authorised surplus payments to members. Source: Defined benefit pension scheme surplus payments to members, line 5 — Open the official document (opens in a new tab) · Our archived record |
The story
HMRC's note describes a new kind of authorised payment from registered defined benefit occupational pension schemes. It is called an authorised member surplus payment.
Trustees, who run the scheme, would be allowed to make discretionary payments direct to eligible members from any scheme surplus. Discretionary means trustees choose; the note does not say members have a right to a payment.
Any such payment would be taxed as pension income. The rule would apply to payments made on or after 6 April 2027.
The government asked for feedback on the draft legislation by 7 September 2026, by email to policypensions@hmrc.gov.uk. That date has now passed.
What changed
The note says the measure introduces a new authorised member surplus payment from registered defined benefit occupational pension schemes. It does not describe the previous rules.
What it means
Written by AI and checked by a second AI. Published under the responsibility of VERADIQ's human director. Lens: reporter
The text says trustees may make discretionary payments, so this reads as a permission, not an obligation. The document does not say whether any member would receive money; that may depend on trustee decisions and on a scheme having a surplus.
It may open a route for surplus to reach members directly, taxed as pension income. The note gives no detail on how large payments could be.
The document does not give the conditions for eligibility, any limits or any trustee duties; the stored text is only a short summary.
Who is affected
- Trustees of registered defined benefit occupational pension schemes
- Eligible members of those schemes
Key dates
- 2026-09-07 — Deadline for feedback on the draft legislation
- 2027-04-06 — Payments made on or after this date are covered
What the document does not say
- How 'eligible members' are defined.
- How a scheme's 'surplus' is measured, or how much surplus must exist before payments can be made.
- Whether any limit applies to the size of a payment.
- What the position was before this measure, and what the cost or revenue effect is.
Plain-English glossary
How this was checked
Not tax, legal or investment advice.
Corrections
No corrections have been made to this story.