What happens if a defined benefit scheme closes or has a surplus?

A defined benefit pension scheme surplus reaches the employer only if the rules allow; wider powers are expected in April 2027. Closure keeps past pension.

Two different things can happen to a final salary or career average scheme: it can stop adding new pension for current staff, and it can find itself holding more than it needs. Neither wipes out what you have earned. How each plays out depends heavily on your scheme's own rules. Because the answer sits in your trust deed, the form on this page makes a sensible first move: an FCA-authorised adviser rings back about your scheme, free.

Closed to new members, closed to future accrual, or wound up?

The Pensions Regulator (TPR) uses three labels, and they mean different things for you. A scheme closed to new members is one "in which existing members can continue to accrue benefits but no new members can join". A scheme closed to future accrual is one "where existing members can no longer accrue new years of service and no new members can join". Winding up is the end of the road: the scheme is closing for good, which is the territory of whether final salary pensions are protected and the Pension Protection Fund.

Closure is common. TPR's 2025 landscape report, published 16 December 2025, says the percentage closed to future accrual, leaving out schemes in wind-up, rose from 73% in 2024 to 74% in 2025. Which employers still offer final salary pensions explains how that came about.

What happens to your pension when a scheme closes to future accrual

You stop adding new years of pension, and TPR's definition says nothing about taking away the years you already have. Those stay in the scheme as a deferred benefit; how a deferred pension grows and how to read the statement covers the detail. What new service earns afterwards, if you carry on working for the employer, depends on what the employer offers instead.

An employer cannot simply announce closure. The consultation regulations list "to prevent the future accrual of benefits under the scheme for or in respect of members or members of a particular description" as a change that triggers a duty to consult, and they say the period allowed "must not be less than 60 days". The duty applies to employers with at least 50 employees in Great Britain. The rules sit in the Occupational and Personal Pension Schemes (Consultation by Employers and Miscellaneous Amendment) Regulations 2006.

Can an employer change a defined benefit pension?

The answer is rarely a flat no or yes. Section 67 of the Pensions Act 1995 covers changes to rights already built up. A change of that kind can be set aside unless set conditions are met: the member's consent (the only route for some protected changes) or actuarial equivalence, plus trustee approval and reporting. Section 67 does not cover powers in public service pension schemes, so NHS, teachers' and similar schemes are governed by their own rules and legislation.

Changes to future pension are treated differently. The consultation list also covers changes to the pension rate, the way benefits are worked out and what counts as pensionable pay. For whether the pension you are already paid or promised can fall, see can final salary pensions go down.

Setting the closure letter beside your other income and benefits is easier on a call, which you can request in the enquiry form here.

What is a defined benefit pension scheme surplus?

A scheme has a surplus when its assets are worth more than the cost of the pensions it has promised. Measuring that cost depends on the basis used. TPR's statement of 10 June 2026 says it is "now estimated that around 60% of schemes are in surplus on a buyout basis and around 80% of them are in surplus on a low dependency basis". TPR's guidance calls a buy-out "a fully insured solution for liabilities of all scheme members", so surplus on that basis is measured against insuring everyone. It treats a scheme as self-sufficient when it is fully funded on the low dependency funding basis and no further employer contributions are expected under reasonably foreseeable circumstances.

A surplus is not a bonus waiting to be paid out: your pension is still the promise in the scheme rules.

Who can receive a defined benefit scheme surplus?

Under the law as it stands, TPR says, "Existing legislation only permits DB schemes to release surplus to the employer if their trust deed and rules contain provisions to that effect, and only when the scheme is funded above buyout levels." In practice few schemes' rules provide for that. Surplus on a wind-up is a separate route: section 76 of the Pensions Act 1995 requires, among other things, that "the liabilities of the scheme have been fully discharged" before assets go to the employer.

The Pension Schemes Act 2026 will change this once its surplus sections are brought into force. Section 9 will let trustees modify their scheme by resolution to allow payment of surplus to the employer, though not while the scheme is being wound up. Section 10 adds that payment may only be made as regulations permit, and those regulations must require an actuary's certificate and notice to members before any payment. TPR expects the conditions to include certification by an actuary, employer consent and notification to members, with the funding test likely to be set on the low dependency basis. Its page, last updated 19 October 2026, says the new powers are "Expected to come into force in April 2027", and that the government is still consulting on the regulations.

Members may benefit too, but only at trustees' discretion. The government's intention, TPR notes, is "not to mandate the use of surplus for any particular purpose", and trustees might weigh "whether members have a reasonable expectation to share in surplus, especially if discretionary benefits have been regularly granted". HMRC's Finance Bill 2026-27 plan would let a scheme, where its rules permit and at the trustees' discretion, pay surplus directly to a member for payments on or after 6 April 2027, paid as pension income at the member's marginal rate of tax. That is announced policy, not yet law. Today, HMRC says, a surplus payment to a member "would be subject to an unauthorised payment tax charge of at least 40%".

Whether your own scheme's rules say anything about sharing surplus is something the trust deed settles, and the scheme can tell you where to find it.

What a surplus does and does not mean for your pension

It does not by itself raise your pension. Increases in payment and revaluation follow the scheme rules and the law, as in whether final salary pensions rise with inflation. Leaving or redundancy is a separate question. What a bulk annuity or pension risk transfer means explains the insurer route.

It also does not make a transfer out look better or worse. A transfer value is calculated separately; how a transfer value is worked out and whether to transfer out of a final salary pension cover that. Advice is needed before transferring safeguarded benefits unless the transfer value is £30,000 or less, under SI 2015/742 as it has stood since 6 April 2018, and the FCA says it and TPR "believe it’s in most people’s best interests to keep their DB pension". One scheme with its own surplus-sharing arrangement is covered in Mineworkers' Pension Scheme surplus sharing.

The form on this page takes five fields, and the adviser firm that calls back can talk you through your scheme's paperwork at no charge.

Four other things readers ask about closed schemes and surplus

Can a final salary pension be changed after I have retired?

The rules above cover members who are working or have deferred benefits. For pensions already in payment, the scheme's rules, the law on increases and your type of scheme decide it, and can final salary pensions go down goes through it.

Does closing to future accrual mean my pension is lost?

No: the definition covers new years of service only. What you have built stays with the scheme, and deferred pensions explains how it is looked after.

What is an unfunded defined benefit scheme?

One with no pot of assets behind it. The Home Office's members' guide to the New Police Pension Scheme 2006 explains that for an unfunded scheme "there is no pension fund as such", and MoneyHelper puts the NHS and Teachers' Pension Schemes in the same group. The surplus powers above are for trust schemes, and an adviser can explain how yours is set up if you use the form.

How do I tell whether my scheme is closed or in surplus?

Start with checking whether your workplace pension is final salary, then ask the scheme whether new pension is still being added. The funding position is a question for the trustees.