PSI20.1.12 - Funding and Surpluses: Funding
General - Final Salary Schemes
-
(This archived guidance relates to HMRC discretionary
practice before the 6th April 2006. For current guidance on
Registered Pension Schemes see the Registered Pension Schemes
Manual)
The actuary’s main concern on final salary (defined
benefits) schemes is to ensure that the contributions are set at a
level which is sufficient to provide the promised benefits when
they fall due. To do this the actuary makes a series of estimates
which are commonly called actuarial assumptions. The main
assumptions are:
- the life expectancy of the scheme members
(see
PSI20.1.20-23),
- the likely career development and final
salaries of the members (see
PSI20.1.26-27),
- the amount of any increases to pensions in
payment (see
PSI20.1.30-31),
- the return on the scheme’s
investments (the “investment return”) (see
PSI20.1.33), and
- the effect that inflation will have on the
real value of the members’ salaries and the scheme’s
investment income (see
PSI20.1.34-35).
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