What is an actuarial valuation?

How do we know if the Fund has enough money to pay your pension?

Every three years the Trustee looks at the value of the Fund’s assets compared to how much it will need to have to pay for members’ benefits (including your pension).

If it looks like there may be a gap in future – the Trustee can take action now.

The process of working this all out and deciding what actions to take is called an actuarial valuation. Let’s give you an idea of how the numbers are calculated so you can understand what they really mean for you.

It’s worth knowing that the Trustee uses independent experts (called actuaries) to help them. It’s their role to review how much money the Fund has, and needs, based on calculated estimates about what might happen in the future such as how long people will live and future investment returns.

The actuary for the Fund is Debbie Webb, of WTW.

To work out how much the Fund is likely to have, Debbie and her team look at the Fund’s current assets and estimate how much money new contributions and investment returns will bring in over time.

To work out how much the Fund will need to have, they look at how much pension each member is due under the rules, and things like their age and life expectancy.

If they work out that the Fund has more than enough to pay all members’ benefits, it is said to be in surplus. But if it looks like the Fund is likely to have less than what it needs, then it’s in deficit.

Regular actuarial valuations like this help the Trustee keep track of the Fund’s finances and take action to ensure there is enough money to pay all members’ benefits, including your pension.

In the years in between actuarial valuations, Debbie and her team complete additional checks, just to make sure our finances are moving in the way we expect them to.

We publish our financial picture in the Newsroom every February.

Please do have a look around while you’re here – you might find other useful news and topics too.