PSI20.2.25 - Funding and Surpluses: Self-Administered Schemes - Form of Actuarial Reports - Control on Funding - Surpluses

(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)

At any point in time a scheme should generally be funded only to the extent necessary to provide the proportion of benefits that have accrued by reference to the members’ service up to that date but taking account of expected future salary increases up to NRD or the time when benefits will become payable. Ideally, future service should be funded by future contributions. If the valuation report discloses a large surplus you will need to ensure that action is taken to deal with it. A large self-administered scheme will fall within the scope of the Pension Scheme Surpluses (Valuation) Regulations (see PSI20.2.5) if it is approved, and so must produce either a prescribed basis valuation or certificate. If this discloses assets exceeding 105% of the liabilities you should refer it, together with the scheme file, to Surplus Funds Section in accordance with PSI20.6.23. If such a scheme working on interim documentation reveals a surplus in excess of 5% of the liabilities you should proceed as instructed in PSI20.6.17. Where a small self-administered scheme valuation report reveals a surplus you should proceed as explained in the SSAS Guidance Notes.

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