Surplus offsetting guidance 2025/26
This guidance only applies to employers claiming surplus in £'s not exiting the Fund in 2026/27. Employers claiming surplus as % of pensionable pay or where their admissions to the Fund may be ending in 2026/27, will continue to claim surplus monthly.
Process for reclaiming contribution surplus
Following a valuation an employer in the Fund may find that they are in a surplus position. You can verify if you are in surplus by checking your valuation report.
If you are in this position, you are eligible to reclaim this amount against your employer contributions in line with the following scheme rules:
- A surplus may only be reclaimed against employer contributions for a single month.
- You may not offset against employee contributions as there is a legal requirement that they always be passed to the Fund.
- A surplus must be offset against the individual employer; they cannot be applied to another employer within the Fund.
- A surplus cannot be paid out of the Fund directly to the employer; they must be offset solely against employer contributions.
The example below applies to employers who have confirmed that they wish to reclaim their surplus over the shortest timescale.
Example surplus adjustment
Employer Surplus for the year: £10,000
Employer Contribution Rate: 20%
| Month | Pensionable Pay | Employee Contributions | Employer Contributions | Gross Contributions | Surplus Offset | Net Payment | |
|---|---|---|---|---|---|---|---|
| April | 40,000 | 2,200 | 8,000 | 10,200 | (8,000) | 2,200 | |
| May | 40,000 | 2,200 | 8,000 | 10,200 | (2,000) | 8,200 | |
| June | 40,000 | 2,200 | 8,000 | 10,200 | 0.0 | 10,200 | |
| Total | 6,600 | 24,000 | 30,600 | (10,000) | 20,600 | ||
Adjustments to your monthly i-Connect submission
A surplus should not change the contribution amounts you include on your monthly i-Connect submission which must be included in full as the correct percentage of pensionable pay.
A surplus will create a tolerance breach which must be explained by typing the surplus or deficit adjustment in the ‘Reason for difference’ text box on the i-Connect Payroll dashboard.
Find out about your i-Connect Payroll submission and payment
Example i-Connect submission adjustment
Month: April
Employee Contributions: £2,200
Employer Contributions: £8,000 (PP 40000*20%)
Total i-Connect submission value: £10,200
Actual Payment which should be made to the Fund: £2,200
'Reason for the difference' text box on the i-Connect Payroll dashboard: Surplus deduction of £8,000
Help reclaiming surplus
If you have any queries regarding the claiming of surplus please contact pensions_contributions@bathnes.gov.uk