Actuarial valuation meaning

In this issue: The Pensions Regulator Pensions dashboards Collective defined contribution schemes Public sector pensions Daily and weekly news alerts Dates for your diary Trackers The Pensions Regulator TPR publishes final Fast Track parameters The Pensions Regulator (TPR) has issued a standalone, finalised version of the Fast Track tests and conditions. Previously included as Appendix 1 to TPR’s response to its Fast Track and regulatory approach consultation, this document details the parameters that a defined benefit (DB) scheme must meet when submitting an actuarial valuation with an effective date on or after 22 September 2024 under the Fast Track route. In essence, the framework sets expectations across funding and investment stress, technical provisions, investment risk, and the recovery plan. In completing the parameters, TPR made a number of minor tweaks to better clarify its intentions. Fast Track is one of two newly introduced pathways—alongside the Bespoke route—available to trustees when filing a DB scheme valuation dated...

Substance of consultation The government seeks views on proposals to hasten the overhaul and modernisation of the LGPS. At the heart of the plan is a clear intention to speed up the pooling of LGPS assets rapidly. Combining LGPS funds is not a novel idea indeed. Pool structures have existed in practice since 2015, when eight pools were created in total across the system. Nine years on today, under half of LGPS assets under management (AUM) are run collectively via these pooling arrangements. Ministers consider this inadequate overall and now propose that, by March 2026, every LGPS asset is overseen within eight so-called mega-funds. The LGPS is not a single scheme; as noted above, it comprises 86 distinct sections in England and Wales—each run by its own administering authority. Government wants to alter how these authorities handle their sections and has required every administering authority to submit plans setting out how pooling will be delivered fully by the end of March 2025. Hitting that timetable will be demanding, even...

R (on the application of the British Medical Association) v His Majesty’s Treasury and another; R (on the application of The Fire Brigades Union and others) v His Majesty’s Treasury and another [2024] EWCA Civ 355 What are the practical implications of this case? Barring any further appeal, the Court of Appeal’s ruling places the McCloud Remedy’s costs on present scheme members, in the same way as other valuation components tied to member profiles (for example life expectancy and pay growth), rather than on scheme employers. Employers, together with the Exchequer, continue to shoulder variability from financial and technical assumptions, such as the discount rate and actuarial methods. Unsurprisingly, members are unlikely to view this favourably, particularly where it can fairly be said that the government’s own failure to avoid discriminatory treatment when setting up the new public sector pension arrangements gave rise to the McCloud Remedy in the first place. Nevertheless, the outcome aligns with the way the Remedy has been constructed and with the policy context...

THIS PRACTICE NOTE APPLIES IN RELATION TO DEFINED BENEFIT LIABILITIES How defined benefit (DB) liabilities ought to be assessed depends on a number of factors, in particular: the valuation approach to be adopted. Common exercises undertaken comprise the following: scheme-specific funding valuations as required under Part 3 of the Pensions Act 2004 (PeA 2004) solvency (or buy-out) valuations as required by the Occupational Pension Scheme (Scheme Funding) Regulations 2005, SI 2005/337, reg 7 valuations required by the PeA 2004, ss 143 and 179 (often described respectively as s 143 valuations and s 179 valuations) neutral estimates to meet the requirements of Technical Actuarial Standard 300 (Pensions) cash equivalent transfer values (CETV) as specified under the Occupational Pension Schemes (Transfer Values) Regulations 1996, SI 1996/1847 IAS19 and UK GAAP valuations whether the liabilities under review concern past service or future service, as distinct categories This Practice Note sets...

This practice guidance specifically concerns trust-based workplace pension schemes offering defined benefits Statutory requirement for actuarial funding valuations Trustees of private‑sector defined benefit (DB) workplace pension schemes that are registered with HMRC must, by law, carry out actuarial funding valuations no less than once every three years. The same obligation extends to any arrangement delivering defined contribution benefits where a DB guarantee underpins them. Moreover, schemes’ trust deeds and rules frequently embed an equivalent statutory requirement for actuarial funding valuations as standard practice...

This practice note applies only to defined benefit and hybrid occupational pension schemes Determining normal pension age under the scheme’s admissible rules Members’ normal pension age under the scheme’s admissible rules must be clearly and accurately identified so that: an eligible scheme can supply the Pension Protection Fund (PPF) with an actuarial valuation of the scheme’s assets and protected liabilities at prescribed, set intervals, for the purpose of enabling the PPF to compute risk‑based pension protection levies where the scheme is within an assessment period, the PPF can secure an actuarial valuation of the scheme’s assets and protected liabilities as at the relevant time as required the PPF can determine the date from which compensation will be payable to an individual (and the amount of that compensation) under the pension compensation provisions of the Pensions Act 2004, s 162 and Sch 7 (PeA 2004) For more on identifying a scheme’s admissible rules, see Practice Note: The Pension Protection Fund—what are...