The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005.
This, together with documents issued by the Pensions Regulator and Technical Actuarial Standards issued by the Financial
Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK.
The scheme is classified as a ‘last-man standing arrangement’. Therefore the association is potentially liable for other
participating employers’ obligations if those employers are unable to meet their share of the scheme deficit following
withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an
annuity purchase basis on withdrawal from the scheme.
A full actuarial valuation for the scheme was carried out with an effective date of 30 September 2014. This actuarial valuation
was certified on 23 November 2015 and showed assets of £3,123m, liabilities of £4,446m and a deficit of £1,323m. To eliminate
this funding shortfall, the trustees and the participating employers have agreed that additional contributions will be paid, in
combination from all employers, to the scheme as follows:
Deficit contributions
Tier 1: £40.6m per annum
From 1 April 2016 to 30 September 2020: (payable monthly and increasing by 4.7% each year on 1st April)
Tier 2: £28.6m per annum
From 1 April 2016 to 30 September 2023: (payable monthly and increasing by 4.7% each year on 1st April)
Tier 3: £32.7m per annum
From 1 April 2016 to 30 September 2026: (payable monthly and increasing by 3.0% each year on 1st April)
Tier 4: £31.7m per annum
From 1 April 2016 to 30 September 2026: (payable monthly and increasing by 3.0% each year on 1st April)
Note that the scheme’s previous valuation was carried out with an effective date of 30 September 2011; this valuation was
certified on 17 December 2012 and showed assets of £2,062m, liabilities of £3,097m and a deficit of £1,035m. To eliminate this
funding shortfall, payments consisted of the Tier 1, 2 & 3 deficit contributions.
Where the scheme is in deficit and where the association has agreed to a deficit funding arrangement, the association
recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions
payable under the agreement that relates to the deficit. The present value is calculated using the discount rate detailed in
these disclosures. The unwinding of the discount rate is recognised as a finance cost.
Present values of provision
31 Mar ‘17
31 Mar ‘16
31 Mar ‘15
£’000
£’000
£’000
Present value of provision
8,079
8,637
9,172
Financial Statements 2017
79