What happens to any surplus in a pension fund that is wound up?

This will depend on what the trust deed says about surpluses.

If the trust deed gives the trustees

• sole discretion to increase benefits, then they can do this as long as they do not exceed the Inland Revenue limits.
• the right to increase benefits only with the consent of the employer, then they will need to negotiate with the employer.
• a duty to increase benefits with any surplus, then they should do this, but cannot exceed the limits allowed by the Inland Revenue.

If there is still a surplus it can be returned to the employer as long as the right legal procedures are followed which include a period in which members can raise objections with the Pensions Regulator.

Unfortunately, the Regulator cannot block a surplus going to the employer simply because it is unfair. The complaint must be that the right procedures have not been followed. In these circumstances you will probably need specialist advice.

There's more information about winding up on the OPAS website.