Pensions in 30: 8. Ongoing scheme funding

The Month in Pensions - Gowling WLG

Key points

• Most defined benefit pension schemes are funded through a combination of employer contributions and investment returns, although the requirement for member contributions is increasing
• Rules exist that seek to ensure that pension schemes will be able to afford to pay member benefits when they fall due
• Pension schemes have an ongoing "statutory funding objective" to have sufficient and appropriate assets to cover their technical provisions (i.e. the actuarially-assessed value of each scheme's liabilities)
• Pension schemes must undergo an actuarial valuation every three years in accordance with section 224 of the Pensions Act 2004
• Trustees must put in place various documents as part of an actuarial valuation, including a statement of funding principles (section 223 of the Pensions Act 2004), a recovery plan (section 226 of the Pensions Act 2004) and a schedule of contributions (section 227 of the Pensions Act 2004)

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