Scheme funding
From its launch in March 1988, the Scheme has undertaken an Actuarial Valuation every three years.
Funding History
Prior to 2003 each of these Valuations indicated that the Scheme held assets in excess of its expected future liabilities. As a result, all members received bonuses in 1988, 1992, 1995, 1998 and 2001 in the form of additional increases in their pension – over and above the normal annual increases. Other members received percentage increases in the level of their accrued benefits.
In effect, the surplus was split between the members and the Company. The Actuary’s advice at the time was that there was no need for the Company to make contributions as the Scheme continued to be in surplus. Indeed, if the Company had made further contributions the funding position would have exceeded limits imposed by the Inland Revenue.
Funding Position
The Scheme’s funding position was agreed as at 31 March 2008 by the Trustee and the Company, with the Technical Provisions amounting to £4,168m, giving a Scheme deficit of £285m. The Scheme Actuary has reviewed this in an Actuarial Report as at 31 March 2010 which was issued to the Trustee at its meeting on 20 May 2010.
It describes the development of the Scheme’s Technical Provisions and funding level over the year since the last valuation of the Scheme and should be considered in conjunction with the Report on the valuation as at 31 March 2008.
The 2010 Actuarial Report is not a formal valuation of the Scheme. However the Scheme Actuary confirmed that this report is consistent with the advice provided for the valuation
Review of the funding level
The 2010 Actuarial Report showed the funding level of the Scheme at 31 March 2010 to be 93%, the same position as at 31 March 2008.
In accordance with the agreed Recovery Plan during the year the Scheme received the following deficit reduction contributions from the Company.
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September 2009
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£18.5m
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27 January 2010
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£18.5m
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In total, contributions (other than AVCs and the DC Section) of £48.5m were received by the Scheme over the period 1 April 2009 to 31 March 2010, of which £37m were in respect of the deficit. The value of the existing recovery plan at 31 March 2010 was £239m compared to the estimated shortfall of £277m. The Actuarial Report as at 31 March 2009 showed an estimated shortfall of £594m and therefore there has been a significant improvement in the Scheme’s funding position over the last twelve months, resulting in the Scheme assets
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