Pensions Talks Interview: Morten Nilsson, CEO, Brightwell

This month, we spoke to Morten Nilsson, CEO of Brightwell who offered insight into the Pension Schemes Bill, how companies like Brightwell will navigate the regulatory landscape following the new regulation, the release of surplus funds aimed at driving sustainable growth for defined benefits schemes and the impact of private market investments on pension schemes. 

The Pension Schemes Bill 2025 has been described as a ‘once in a generation’ opportunity. What aspects of the bill do you believe will have the most lasting impact on the pensions landscape?

The Pension Schemes Bill 2025 represents a pivotal moment for the UK pensions sector. From a defined benefit perspective, its most enduring impact will likely stem from the statutory override enabling trustees to amend scheme rules to allow surplus payments to sponsoring employers. This reform addresses a long-standing asymmetry: while employers have always borne the responsibility for funding deficits, they’ve had limited access to surpluses. By addressing this imbalance, the Bill introduces a more equitable framework that encourages long-term scheme stewardship and unlocks capital that can be reinvested in the UK economy or shared with members of either the DB or DC scheme. It also signals a broader shift in regulatory thinking away from a one-size-fits-all model and towards a more flexible, approach that empowers trustees and sponsors to make decisions in the best interests of all stakeholders.

Brightwell has welcomed the government's proposals on surplus release. How do you see these changes reshaping the long-term strategy for DB schemes?

We see surplus release as a catalyst for a more dynamic and sustainable future for DB schemes. Our research shows that 93% of finance leaders of large schemes plan to access surplus, with nearly half intending to reinvest in UK operations. This creates a powerful incentive for sponsors to run schemes on rather than pursue buyouts, especially when surplus can be used to re-invest in corporate priorities, make one off payments to members or fund DC arrangements. Strategically, this could lead to a rebalancing of endgame planning where schemes are managed for long-term value rather than simply de-risked and offloaded. It also encourages more growth-oriented investment strategies that aim to generate surplus while maintaining benefit security.

What safeguards do you believe are essential to ensure that surplus release benefits both scheme sponsors and members fairly?

Safeguards are absolutely critical. Surplus should only be released when schemes are demonstrably well-funded, and trustees are confident that it is safe to do so. A gradual, phased release of surplus funds over time reduces the regret risk of large one-off payments and allows surplus funds to be generated and released on a more predictable and stable basis. This approach could be structured as a 'surplus recovery plan' to mirror the 'deficit recovery plans' that currently exist in the DB funding regime. This would remove the potential for conflict between trustees and sponsors that could arise due to the subjectivity of discount rate setting, whereby, for example, sponsors may be incentivised to maximise the discount rate to extract surplus sooner and trustees, and their advisors, may be incentivised to be overly prudent.

Ultimately, trustees must retain discretion and be guided by a robust governance framework that balances sponsor interests with member protection.

How should pension schemes approach private market investments, given the extra work and oversight they require?

Private markets offer attractive opportunities for diversification and long-term returns, but they demand a disciplined approach. Schemes should ensure they have the right governance structures, expertise, and operational capacity to manage these assets effectively. This includes rigorous due diligence, clear alignment with cash flow needs, legal and tax expertise and ongoing monitoring of performance and risk. At Brightwell, we believe that scale and collaboration can help schemes access private markets more efficiently while maintaining strong oversight.

What role do you see Brightwell playing in helping schemes navigate the new regulatory landscape once the Pension Schemes Bill is enacted?

Brightwell is uniquely positioned to support schemes through this transition as we’ve been implementing run-on investment strategies in practice for a number of years now and understand how to manage and mitigate investment and funding risks, and crucially how to optimise for cashflow, liquidity and collateral needs. We’ve distilled all of this into our run-on toolkit which can be found on the Brightwell website here.

While the new legislation isn’t due to come into effect until 2027, there’s a lot that Trustees can be doing now to develop the appropriate frameworks for surplus release – we have deep experience of this and as such, are sharing that knowledge and advice with our clients and partners.