Funding standard and funding standard reserve
Under the funding standard provisions of the Pensions Act, defined benefit schemes (excluding certain schemes primarily in the Public Sector) are required to prepare and submit to the Authority, actuarial funding certificates at three yearly intervals. From 1 June 2012, such schemes must also prepare and submit funding standard reserve certificates at similar intervals.
The purpose of the actuarial funding certificate and funding standard reserve certificates is to enable the scheme actuary to certify whether or not the scheme meets the funding standard and funding standard reserve. Actuarial funding certificates and funding standard reserve certificates must be submitted to the Pensions Authority in accordance with the time limits detailed in the Pensions Act.
If the scheme does not meet the funding standard or funding standard reserve, a funding proposal must be submitted to the Authority in accordance with the time limits detailed in the Pensions Act.
Schedule BE – Funding Standard Reserve Certificate
With effect from 27 May 2013 the percentage prescribed under section 44(2)(a) of the Pensions Act for the purpose of the funding standard reserve is 10%. This percentage should be used for all Funding Standard Reserve Certificates (FSRCs) that have an effective date of 27 May 2013 or later. The percentage to be used for FSRCs with an earlier effective date is 15%.
Defined benefit statistics report
The Pensions Authority publishes a report on statistics for defined benefit (DB) schemes which have been compiled from analysis of Annual Actuarial Data Returns (AADRs).
Trustees of defined benefit (DB) schemes subject to the funding standard as set out in the Pensions Act have been required to submit an AADR to the Pensions Authority since 2012. The AADR includes details of the status of a scheme as to whether it is current, frozen or in wind-up and sets out the assets and liabilities for the scheme. In relation to the assets of a scheme the actuary must report the breakdown of the assets across equities, bonds, property and cash. The report also classes the liabilities across the membership of the scheme broken down by active, deferred or retired members.
The Authority is publishing this data to increase the general understanding of the importance of the DB pensions sector and it intends to issue these statistics on an annual basis.