The Association of Consulting Actuaries ACA has decided to expand the employer’s annual contribution to the pension scheme by 15bn to 27bn, in order to increase the savings base of pension scheme, by giving more investment freedom as per the Pensions Act 2004. But the employers are strained by the payments as the pension scheme will be incurring major costs.
The funding triggers as proposed by the regulator are in between 70 to 80 percent of a scheme’s buy out cost, which makes the funding triggers heterogeneous and unreliable. As said by Charles Young, chairman of the ACA pension schemes committee:
Funding triggers of the kind described in the Regulator’s consultation document might be appropriate when schemes are very mature, with few or no employee members. If the targets are to be applied to all schemes, they need to be introduced over a long transition period, perhaps 20 years. If a shorter transition is to be adopted, we do not agree that current funding targets need uplifting to the extent proposed by the Regulator.
