CARRIER (UK) PENSION SCHEME YEAR ENDED 31 DECEMBER 2020
TRUSTEE’S REPORT
Report on Actuarial liabilities
As required by Financial Reporting Standard 102, ‘The Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland’ (FRS 102), the financial statements do not include liabilities in respect of promised retirement benefits. Under section 222 of the Pensions Act 2004, every scheme is subject to the Statutory Funding Objective, which is to have sufficient and appropriate assets to cover its technical provisions, which represent the present value of benefits to which members are entitled based on pensionable service to the actuarial valuation date. This is assessed at least every three years using assumptions agreed between the Trustee and the employers and set out in the Statement of Funding Principles, a copy of which is available to members on request.
The latest actuarial valuation as at 31 December 2019 was finalised on 31 March 2021.
A summary of the funding position, in accordance with the Statutory Funding Objective, at the actuarial valuation date, was as follows:
Value of assets available to meet technical provisions
£125.1m £127.7m
Value of technical provisions
Past service deficit
£2.6m
Funding ratio
98%
The value of technical provisions is based on Pensionable Service to the valuation date and assumptions about various factors that will influence the Scheme in the future. The following significant actuarial assumptions have been used in the calculations;
Discount interest rate: o
Pre-retirement: 3.50% pa Post-retirement: 1.90% pa
o
Future Retail Price inflation: 2.85% pa
Future consumer Price inflation: 2.30% pa
Pension increases: o
GMPs accrued post 5 April 1988: 2.30% pa o Non GMP benefits accrued pre 6 April 1997: 3.00% pa o Benefits accrued from 6 April 1997 to 31 March 2000: 3.25% pa o Benefits accrued from 1 April 2000 to 5 April 2005: 2.85% pa o Benefits accrued from 6 April 2005: 2.50% pa
Mortality: o
Base table: S3PMA (males) and S3PMA_M (females). o Future improvements: CMI 2019 core projection model except Sk = 7.5 with a 1.75% pa long term improvement trend. The Participating employers are required to pay contributions to the Scheme in accordance with the Schedule of Contributions signed on 13 April 2018 until 31 March 2021 and in accordance with the Schedule of Contributions signed on 31 March 2021 from that date. As shown above the actuarial valuation at 31 December 2019 revealed a funding shortfall of £2.6m. To correct the shortfall, the employer will pay a contribution of £540,000 pa whilst the deficit remains at or above £540,000 as assessed each December. If the deficit as assessed each December falls below £540,000, lower contributions will be payable to reflect the actual deficit. The payments will normally be made monthly, but the Trustee and employer can agree for payments to be made earlier if appropriate.
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