Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Liabilities definition

What does Liabilities mean? In practice, a scheme’s liabilities are what it owes: the future benefit payments (for example, pensions and lump sums) and the scheme’s expenses. They are usually measured as the present value of expected cashflows, determined by an actuary using assumptions on discount rate, longevity, inflation and expenses. Comparing liabilities with the market value of assets gives the funding level: a deficit arises where liabilities exceed assets; a surplus where assets exceed liabilities. “Liabilities” is a descriptive term used across legal, actuarial and accounting contexts rather than a single statutory definition. However, valuation bases are prescribed for particular purposes. In...

Valuing DB pension liabilities: scheme-specific funding (technical provisions) and low dependency, buy-out, PPF s143/s179, CETVs, IAS 19/UK GAAP and related funding concepts

Published by a LexisNexis Pensions expert

Practice notes

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 out these valuation approaches together with the associated funding concepts, and explains the above methods...

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Tyron Potts

Barnett Waddingham LLP

Tyron Potts graduated from the University of Warwick with a first-class honours degree in mathematics, operations research, statistics and economics, and qualified as a Fellow of the Institute & Faculty of Actuaries in 2007. He joined Barnett Waddingham in February 2008, following the firm's acquisition of Garvins. In his role as chair of the firm's Pensions Research Group, Tyron is responsible for producing many of Barnett Waddingham's information bulletins and our monthly and quarterly Current Pensions Issues publications. Tyron and his team ensure that Barnett Waddingham's consultants and clients are kept informed about changes to pensions legislation and guidance, and that our views are represented in industry-wide consultations. Tyron is also a member of the Association of Consulting Actuaries' (ACA) Pension Schemes Committee. Tyron regularly speaks on technical issues at seminars, and he chairs training sessions for pension scheme trustees in our...

Web page updated on 22/05/2026

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