PSI20.2.22 - Funding and Surpluses: Self-Administered Schemes - Form of Actuarial Reports - Actuarial Solvency

(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 scheme is actuarially fully solvent if its assets equal or exceed its liabilities. This is to say that its existing assets plus future contributions for present members will be sufficient to cover pensions already in payment plus benefits accrued by past service and to be earned by future service of those employees. Solvency is not however a permanent state. It can, for example, be lost if salaries increase faster than predicted. Final actuarial solvency is reached when existing assets are sufficient to cover all liabilities in respect of past and present members without the need for further contributions. This will usually happen only in a closed or paid-up scheme.

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