Scheme funding

This is an exercise conducted by the Actuary to determine the funding level of a defined benefit pension scheme. This involves comparing the value of the assets and the liabilities, from which the Actuary recommends a future contribution rate. The agreed contribution rate is paid by the Company after deducting the contribution rate paid by the active members.

There are different methods for calculating the funding level. These include:

• ongoing basis which assumes the scheme is continuing and all future benefits of the beneficiaries are paid
• discontinuance basis which assumes the scheme is wound up on the valuation date and all members’ benefits are secured with individual insurance policies or transferred to another pension arrangement

The Actuarial Valuation Report is available on request from the Pensions Administration Team.

An actuarial valuation is usually undertaken  every three years, but more often if there are significant changes to the scheme or the membership e.g. if the benefit structure is changed or the membership profile changes as a result of acquisitions or disposals.  An approximate funding update (Actuarial Report) is also prepared by the Actuary in each of the intervening years between formal valuations.

This is how much the SOCPF has to pay out in benefits to all members and their beneficiaries.