Valuation - where the Fund stands

In the years between valuations, an approximate assessment of the funding position is carried out, via an 'annual update'.

A valuation is a complex process. The Scheme Actuary makes a number of 'assumptions' about a range of future events, such as how long members will live, future investment returns, salary growth and price inflation. The assumptions are agreed between the Trustee and the employer of the scheme.

If the Valuation determines that the Fund has more assets than liabilities, this is known as a 'surplus'. If it doesn't, it's known as a 'deficit'. Where there is a deficit, the Trustee and employer need to agree what action to take to improve the position. This is known as a Recovery Plan and the Scheme Actuary has to certify that the Recovery Plan is robust enough to repair the deficit.

If, as a result of a valuation, the employer proposes to increase member contribution rates or change future benefits, then it must consult with members of the scheme on the details of its proposal.

Ultimately, the valuation process exists to protect members and to ensure there is enough money to pay benefit when they're due. It helps to meet the Trustee’s mission to pay members' benefits securely, affordably and sustainably over the long term.

The valuation must be completed within a statutory 15-month deadline of the valuation date. When each valuation and annual update is completed, the Trustee sends a Summary Funding Statement to all members to tell them the results.