PSI20.1.33 - Funding and Surpluses: Funding General - Interest Rates

(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)

A major element of the actuary’s calculation is the rate of return on the scheme’s investments. As with inflation, previous experience is of little value to the actuary. The income received on the scheme’s investments may fluctuate widely in the short term because of changes in interest rates or dividends. The actuary must therefore set what he or she considers to be a reasonable long term rate of return, and adjust this at the periodical reviews.

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