Name of scheme: [pension scheme’s name]
PSR: [PSR]
Statement type: Fast Track pre-relevant date
Statement date: [date]
Part 1: funding and investment strategy
This funding and investment strategy sets out the trustees’ strategy for ensuring that pensions and other benefits under the scheme can be provided over the long term.
Actuarial valuation
The actuarial valuation to which this funding and investment strategy relates has an effective date of [date].
The scheme’s funding level as at the effective date of the actuarial valuation is as follows.
- Low dependency funding basis: [figure]%.
- Technical provisions basis: [figure]%.
Relevant date
The trustees have selected [date] as the scheme’s relevant date.
The actuary has estimated in the actuarial valuation that the scheme’s maturity at the relevant date (duration in years) is [figure] years.
The trustees intend that as at the relevant date:
- The scheme’s funding level on a low dependency funding basis will be: [figure]%.
- The assets of the scheme will be invested as follows:
- Growth: [figure]%
- Matching: [figure]%
- [Optional] Of these assets, those that represent any anticipated surplus assets above the minimum funding level will be invested as follows:
- Growth: [figure]%
- Matching: [figure]%
Funding journey plan
[For schemes without a recovery plan] The trustees’ funding journey plan is illustrated by the following.
[For schemes with a recovery plan] The trustees’ funding journey plan once fully funded on a technical provisions basis is illustrated by the following.
[For schemes both with and without a recovery plan]
- The discount rates and other assumptions used to calculate the:
- scheme’s technical provisions in the actuarial valuation
- intended low dependency funding level at the relevant date, as set out in Appendix 1
- The differences between the above two sets of assumptions, as set out in Appendix 1.
- [For small schemes using a spot rate methodology (not providing yield curves)] How the trustees expect the discount rate or rates to change over time, which can be summarised as follows: [text]
- [For schemes using a pre- and post-retirement discount rate methodology] How the trustees expect the discount rate or rates to change over time, which can be summarised as follows: [text]
- [For all other schemes] How the trustees expect the discount rate or rates to change over time, as set out in Appendix 1.
[Optional] The trustees would also like to add the following.
[text]
Long-term objective
The trustees’ current strategy is for benefits to be provided over the long term in the following way.
[text]
Confirmation of agreement
[For all schemes except those described below] This funding and investment strategy has been agreed by the trustees and the employers.
[For schemes where contribution rates are determined by trustees without the agreement of the employers and only the trustees can reduce those rates or suspend payment of contributions] This funding and investment strategy has been agreed by the trustees following consultation with the employers.
Part 2: supplementary matters
Trustee assessment
[For schemes that have indicated the funding and investment strategy is being successfully implemented in all respects] In the trustees’ opinion, the funding and investment strategy is being successfully implemented.
[For schemes that have indicated the funding and investment strategy is not being successfully implemented in all respects] In the trustees’ opinion, the extent to which the funding and investment strategy is being successfully implemented is as follows.
[text]
[For schemes that have indicated the funding and investment strategy is not being successfully implemented in all respects] Where the trustees do not consider that the funding and investment strategy is being successfully implemented in all respects, they propose taking the following steps to remedy the position (including details on timing).
[text]
The main risks to the implementation of the funding and investment strategy, together with details of how the trustees intend to mitigate them, manage them, or both, are as follows.
[text]
[For schemes that have not identified any significant past decisions relevant to the funding and investment strategy] The trustees have not identified any significant past decisions relevant to the funding and investment strategy.
[For schemes that have identified significant past decisions relevant to the funding and investment strategy] The trustees have the following reflections on significant past decisions that are relevant to the funding and investment strategy. This includes any lessons learned that have affected other decisions or that may do so in the future.
[text]
Actuarial information
Estimate of scheme maturity
The actuary’s estimates of scheme maturity in the actuarial valuation are as follows.
- Scheme maturity at effective date (duration in years): [figure] years.
- [Only for open schemes] Allowance for future accrual in estimating date of significant maturity: [figure] years.
- [Only for open schemes] Scheme maturity at effective date including that allowance for future accrual (duration in years): [figure] years.
- Scheme maturity at relevant date (duration in years): [figure] years.
- Date the scheme is expected to reach significant maturity: [date].
Evidence of how maturity is expected to change over time
The scheme actuary’s estimates of maturity, as shown above, evidence how the maturity of the scheme is expected to change over time by demonstrating the expected change in the scheme’s duration over the journey plan, including when it is expected to reach significant maturity.
[For schemes that do not have a recovery plan] Summary of actuarial valuation
[For schemes that have a recovery plan] Summary of actuarial valuation and recovery plan
The existing funding position of the scheme as set out in the actuarial valuation is as follows.
| Technical provisions | Low dependency | Solvency | |
|---|---|---|---|
| Total assets | £ [amount] | £ [amount] | £ [amount] |
| Active member liabilities | £ [amount] | £ [amount] | £ [amount] |
| Deferred member liabilities | £ [amount] | £ [amount] | £ [amount] |
| Pensioner member liabilities | £ [amount] | £ [amount] | £ [amount] |
| Insured liabilities | £ [amount] | £ [amount] | £ [amount] |
| [Only if the scheme provides DC benefits (including DC AVCs)] Defined contribution liabilities | £ [amount] | £ [amount] | £ [amount] |
| [Only if cash balance benefits] Cash balance liabilities | £ [amount] | £ [amount] | £ [amount] |
| Expense reserves | £ [amount] | £ [amount] | £ [amount] |
| Total liabilities | £ [amount] | £ [amount] | £ [amount] |
| Funding level | [figure] % | [figure] % | [figure] % |
[For schemes that are open to future accrual] The future service contribution rate on an ongoing basis is [figure] % of pensionable salary.
Pensionable salary at the valuation date was £ [amount].
[Optional] In relation to expense reserves, the trustees make the following observations.
[text]
The proportion of the liabilities on a low dependency funding basis that are linked to inflation is [figure]%.
The scheme actuary estimates that the scheme’s sensitivity to inflation is that an assumed change in RPI and CPI (underpinning the related assumptions) of [figure] basis points would lead to a change in the value of the technical provisions’ liabilities of £ [amount].
[For schemes other than small schemes and schemes that use a different pre- and post-retirement discount rate methodology]
The forward yields table in Appendix 1 details the forward rates and premiums used to:
- calculate the technical provisions
- specify the funding level, calculated in accordance with the low dependency funding basis, the trustees intend the scheme to have achieved at the relevant date
The scheme’s recovery plan can be summarised as follows.
- Date recovery plan commenced: [date]
- Date recovery plan ends: [date]
- Technical provisions deficit at valuation date: £[amount]
- Is there allowance for post valuation experience? [‘yes’ or ‘no’]
- [For schemes which are making allowance for post valuation experience] Estimated technical provisions deficit used for recovery plan purposes: £[amount]
The deficit repair contributions for each of the six years after the valuation date are as follows.
- Year 1: £[amount]
- Year 2: £[amount]
- Year 3: £[amount]
- Year 4: £[amount]
- Year 5: £[amount]
- Year 6: £[amount]
Investment information
Current level of investment risk
The trustees have assessed the level of risk in the scheme’s current notional investment allocation (relating to the actuarial valuation to which the funding and investment strategy relates). They have determined that the level of risk is [figure]%.
Evidence for level of investment risk
The trustees have determined the level of risk using a TPR Fast Track stress test.
In making their assessment, the trustees have also taken the following information into account.
The current notional investment allocation relating to defined benefits, can be broken down into the following.
- Fixed-interest UK government bonds: [figure]%
- Fixed interest investment grade bonds (excluding UK government): [figure]%
- Fixed interest sub-investment grade bonds: [figure]%
- UK inflation-linked government bonds: [figure]%
- UK quoted equities: [figure]%
- Overseas quoted equities: [figure]%
- Unquoted or private equities: [figure]%
- Property: [figure]%
- Deferred or immediate fully-insured annuities: [figure]%
- Diversified growth funds: [figure]%
- Cash and net current assets: [figure]%
- Asset-backed contributions (ABCs): [figure]%
- Other: [figure]%
[Only if the scheme has ABCs] [Further information about the ABC arrangements can be found in Appendix 3.]
Liquidity
The trustees’ current notional investment allocation includes:
- [figure]% of highly liquid investments
- [figure]% of illiquid investments
Covenant information
Assessment of employer covenant
The trustees have assessed the strength of the employer covenant as at [date]. They have determined that it is [adequate/inadequate] by reference to the actuarial valuation this funding and investment strategy relates to.
[For schemes other than small schemes and low risk schemes] Evidence this assessment is based on
In making the above assessment, the trustees have considered the following.
- [For schemes relying on contingent assets] Total value given to contingent assets relied on as detailed in Appendix 2: equal to or at least £[amount]
- [For schemes relying on ABCs]: Value of scheme’s interest in ABCs (net present value) as detailed in Appendix 3: £[amount]
- Assessment of reliability period: equal to or at least [figure] years
- Assessment of covenant longevity period: equal to or at least [figure] years
- [For schemes except non-segregated, non-associated multi-employer schemes] Trustees’ assessment of maximum affordable contributions after deficit repair contributions over the reliability period: equal to or at least £ [amount]
[Optional] The trustees have the following comments on their approach to assessing reliability and covenant longevity periods.
[text]
[For multi-employer schemes that are non-segregated and whose employers are non-associated] A summary of the trustees’ assessment of supportable risk over the reliability period is attached as Appendix 4.
The trustees also have the following comments.
[text]
Employer consultation
The trustees [hereby confirm/do not confirm] that they have consulted the employers of the [name of pension scheme] in the preparation or revision of Part 2 of the statement of strategy.
[If there are no comments from the employers] The employers have not asked to include any comments in this document.
[If there are comments from the employer] The employers have asked for the following comments to be included in this document.
Signature of chair of trustees
This document is signed by the chair of trustees on behalf of the trustees of the scheme.
[Name of chair]
[Confirmation of signature]
Appendix 1: actuarial assumptions - discount rates
Discount rates
The trustees use a [horizon method/multiple horizon/constant addition/dynamic/other - text] discount rate methodology. The discount rate is derived by applying a premium to gilt yields. The forward yields table at the end of this appendix outlines the forward rates used in:
- calculating the scheme’s technical provisions in the actuarial valuation
- specifying the funding level, calculated in accordance with the low-dependency funding basis, the trustees intend the scheme to have achieved at the relevant date
The trustees use a [horizon method discount rate methodology/multiple horizon method discount rate methodology]. The discount rate is derived by applying a premium to gilt yields, which is equivalent to an underlying spot rate of [figure] %.
Premiums above this underlying spot rate are used to derive the discount rates used in:
- calculating the scheme’s technical provisions in the actuarial valuation
- specifying the funding level, calculated in accordance with the low dependency funding basis, the trustees intend the scheme to have achieved at the relevant date
These premiums are as follows.
| Technical provisions | Low dependency | |
|---|---|---|
| Premium before [date] (horizon date) | [figure] % | [figure] %] |
| Premium after that date | [figure] % | [figure] %] |
The scheme uses a [constant addition/dynamic/other – text] discount rate methodology. The discount rate is derived by applying a premium to gilt yields. This is equivalent to an underlying spot rate of [figure]%.
The premium applied above this underlying spot rate is equivalent to:
- [figure]% for the purposes of calculating the scheme’s technical provisions in the actuarial valuation
- [figure]% for the purposes of specifying the funding level, calculated in accordance with the low dependency funding basis, the trustees intend the scheme to have achieved at the relevant date
The scheme uses different pre- and post-retirement discount rates. The discount rate is derived by applying a premium to gilt yields. Any underlying yields are set out in the forward yields table at the end of this appendix.
Premiums are applied above these yields to derive the pre- and post-discount rates used in:
- calculating the scheme’s technical provisions in the actuarial valuation
- specifying the funding level, calculated in accordance with the low dependency funding basis, the trustees intend the scheme to have achieved at the relevant date
These premiums are as follows.
| Technical provisions | Low dependency | |
|---|---|---|
| Pre-retirement premium | [figure] % | [figure] %] |
| Post-retirement premium | [figure] % | [figure] %] |
| Pensioner premium | [figure] % | [figure] %] |
The scheme uses different pre- and post-retirement discount rates. The discount rate is derived by applying a premium to gilt yields. This is equivalent to an underlying spot rate of [figure] %.
Premiums are applied above this spot rate to derive the discount rates used in:
- calculating the scheme’s technical provisions in the actuarial valuation
- specifying the funding level, calculated in accordance with the low dependency funding basis, the trustees intend the scheme to have achieved at the relevant date
These premiums are as follows.
| Technical provisions | Low dependency | |
|---|---|---|
| Pre-retirement premium | [figure] % | [figure] %] |
| Post-retirement premium | [figure] % | [figure] %] |
| Pensioner premium | [figure] % | [figure] %] |
Other assumptions
The other assumptions used to calculate the scheme’s technical provisions at the effective date of the actuarial valuation are as follows.
- [For schemes that opt to complete the forward yields table] The RPI, CIP and pay increase assumptions are set out in the forward yields table at the end of this appendix.
- [For schemes that do not complete the forward yields table and have either RPI and CPI or RPI only linked benefits] An RPI assumption of [figure]%.
- [For schemes that do not complete the forward yields table and have either RPI and CPI or CPI only linked benefits] A CPI assumption of [figure]%.
- [For schemes that do not complete the forward yields table and have salary linked benefits] A pay increase assumption of [figure]%.
- [For schemes that make allowance for commutation] An increase in the technical provisions if no allowance is made for commutation of £[amount].
- an expected age of death for male pensioners aged 65 at the valuation date of [figure]
- an expected age of death for female pensioners aged 65 at the valuation date of [figure]
- an expected age of death for future male pensioners aged 45 at the valuation date of [figure]
- an expected age of death for future female pensioners aged 45 at the valuation date of [figure]
Differences between technical provisions and low dependency funding basis assumptions
In addition to any differences in the discount rate premiums set out above, there are also the following differences between the assumptions used to calculate the scheme’s technical provisions in the actuarial valuation, and those used in specifying the funding level, calculated in accordance with the low dependency funding basis, the trustees intend the scheme to have achieved at the relevant date.
[text]
[For all schemes except small schemes opting to provide spot rates]
Forward yields table
Forward yields
| Year | Discount rate: underlying [gilt curve/swaps curve/ inflation /composite /other – text] yields (excluding additions) | [Other than pre-/post-retirement discount rate methodology] Discount rate: additions to curve - technical provisions | [Other than pre-/ post-retirement discount rate methodology] Discount rate: additions to curve - low dependency | [For schemes with RPI-linked benefits] RPI assumption curve | [For schemes with CPI-linked benefits] CPI assumption curve | [For schemes with benefits linked to salaries or open to future accrual] Pay increase assumption curve |
|---|---|---|---|---|---|---|
| 1 | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] |
| 2 | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] |
| 3 | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] |
| 39 | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] |
| 40 | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] | % [figure] |
[Only if there are contingent assets and scheme is not a small scheme or a low risk scheme] Appendix 2: contingent assets
Guarantee
Name of guarantor
- [name]
Guarantor company or charity number
- [text]
Type of guarantee
[Scheme will have selected one of the following:]
- [Formal look-through guarantee]
- [Look-through guarantee subject to limitation(s)]
- [Non-look-through guarantee]
- [For schemes selecting ‘other’] [text]
Value ascribed
- Equal to or at least £ [amount]
Date of valuation
- [date]
Security
Type of security
[Schemes will have selected one of the following]:
- [Security over property]
- [Security over other tangible assets]
- [Security over intangible assets]
- [Security over receivable balances]
- [Cash in escrow]
- [Co-investment vehicle]
- [Other]
Description of underlying asset
- [text]
Value ascribed
- Equal to or at least £[amount]
Date of valuation
- [date]
Other types of contingent asset
Type of contingent asset
[Schemes will have selected one of the following:]
- [Letter of credit]
- [Bank guarantee]
- [Surety bond]
- [Contingent funding mechanism from a third party]
- [Other]]
[Only for contingent funding mechanism from a third party or other]
Description of asset and (where applicable) counterparty(s)
- [text]
Value ascribed
- Equal to or at least [£ amount]
Date of valuation
- [Date]
[For schemes that rely on asset backed contributions] Appendix 3: asset-backed contributions
Type of security
[Schemes will have selected one of the following:]
- [Security over property]
- [Security over other tangible assets]
- [Security over intangible assets]
- [Security over receivable balances]
- [Cash]
- [Other]
Description of underlying asset
- [text]
Maturity date
[Schemes will have selected one of the following:]
- [Evergreen]
- [Fixed expiry with a maturity date of [date]
- [For schemes selecting ‘other’] [text]
Value of scheme’s interest in the ABC (net present value)
- £ [amount]
Date of net present value calculation
- [date]
[Optional] Valuation of underlying asset
- Equal to or at least £ [amount]
[Optional] Date of valuation of underlying asset
- [date]
Income stream
- Year 1: £ [amount]
- Year 2: £ [amount]
- Year 3: £ [amount]
- Year 4: £ [amount]
- Year 5: £ [amount]
- Year 6: £ [amount]
- Year 7: £ [amount]
- Year 8: £ [amount]
- Year 9: £ [amount]
- Year 10: £ [amount]
- Year 11: £ [amount]
- Year 12: £ [amount]
- Year 13: £ [amount]
- Year 14: £ [amount]
- Year 15: £ [amount]
- Year 16: £ [amount]
- Year 17: £ [amount]
- Year 18: £ [amount]
- Year 19: £ [amount]
- Year 20: £ [amount]
Total income stream scheduled at any time thereafter
- Year 21+: £ [amount]