The Scheme is funded by contributions from members and employers. The Trustee invests the contributions to ensure there is enough money to pay benefits as they fall due. The level of contribution required depends on:
- the benefit scale provided
- the type of investments held by the Scheme and the expected return from those investments
- the level of support from participating employers (often known as the employer covenant)
The Scheme Actuary carries out a formal assessment of the Scheme’s financial health at least every three years to check that the Scheme has enough assets to meet future expected benefit payments and to check that the contribution rates remain appropriate.
Depending on the outcome of the Actuary’s calculations, there may need to be changes to the future level of contributions or benefits. If the Actuary’s calculations show a funding shortfall, the Trustee and participating employers will need to agree a Recovery Plan. A Recovery Plan sets out how the Trustee and Employers will correct a funding shortfall, which may require payment of extra contributions.
In between formal assessments, the Trustee monitors the Scheme’s funding level on a regular basis. The Trustee also monitors the Scheme’s investments and the strength of the employer covenant.
The Scheme Trustee prepares an annual summary funding statement for members, beneficiaries and employers providing information from the Scheme’s latest financial health check. The latest Annual Report from October 2017 can be found here.