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Published online by Cambridge University Press: 05 July 2011
This chapter considers the technical elements that go into an actuarial valuation of a defined benefit pension scheme – that is a scheme that promises to pay future benefits, regardless of the actual experience. There are a number of legislative processes surrounding valuations under the Pensions Act 2004 in particular, but these are not considered in depth here.
What is an actuarial valuation?
An actuarial valuation is an exercise for putting a current value on the liabilities of a defined benefit pension scheme and, in some cases, calculating a future contribution requirement. The value may be compared with the value of the available assets in order to determine a surplus or deficit. The future contribution requirement may be the amount needed to meet additional liabilities as they accrue, with an adjustment to allow for the removal of any surplus or deficit.
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