Valuation — where the Scheme stands

Valuation is a complex process. The Scheme Actuary provides specialist advice to the Trustee. The process makes a number of 'assumptions' about a range of future events, such as how long members will live, likely investment returns and salary and price inflation. It also needs consultation, collaboration and eventual agreement between the Trustee, employers and, if relevant, Pensions Committees.

If the Valuation determines that a Section 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.

If, as a result of a deficit, they propose to increase contribution rates or change benefits, then they will consult with members and trade unions.

Ultimately, the Valuation process exists to protect members and ensures benefits get paid when they're due. It provides an opportunity to take stock of the financial health of individual Sections and helps ensure Sections continue to pay members' benefits securely, affordably and sustainably over the long term.

The Valuation must be completed within a statutory 15-month deadline. The latest Valuation for the Scheme is underway and is calculating the funding position as at 31 December 2022.