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 . Scheme valuations are typically completed on a triennial basis , however the 2017 valuation was not made available by the SHPS scheme actuary . 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 |
2018 |
2017 |
2016 |
|
£’ 000 |
£’ 000 |
£’ 000 |
Present value of provision 7,053 8,079 8,637
Financial Statements 2018 65