21 March 2007
'Scheme Specific Funding Made Simple' is the latest title in the
NAPF's Made Simple publication series and offers guidance on the
new funding regime for defined benefit schemes, introduced by the
Pensions Act 2004. It is aimed at trustees, company executives,
scheme secretaries, pensions managers and advisers and indeed
anyone involved in the running of defined benefit schemes.
The guide describes in plain English the technical provisions,
recovery plans, actuarial valuations and reports, the schedule of
contributions, the statement of funding principles, and the role of
the Regulator. The detailed regulations, Code of Practice and
regulatory guidance are plainly conveyed in one 30-page handy
reference source.
The Pensions Act 2004 stipulates that schemes conducting
valuations today should calculate liabilities in accordance with a
new Statutory Funding Objective (SFO). This requires them to use a
scheme-specific funding target which trustees must agree with the
sponsoring employer, taking the strength of the employer's covenant
into account.
According to the NAPF's latest Annual Survey, two-thirds of
pensions schemes said that a scheme-specific funding standard was
either agreed or under discussion. Trustees are required to agree a
timetable with the sponsoring employer within which the scheme
should be fully funded against its SFO. Almost half of respondents
who had formed an expectation thought that their scheme would be
fully funded against its SFO within 9 years. Some 39 per cent of
respondents expect it to take between 9 and 10 years but 16 per
cent thought it would take more than 10 years.
Scheme Specific Funding Made Simple costs £15 for NAPF
members and £30 for non-members and can be ordered online at
www.napf.co.uk/publications/.
