Trustee Report

For members in the Defined Benefit section of the Plan

As part of our statutory duty, we’re required to provide you with a Summary Funding Statement each year. This update outlines the financial health of the Plan and helps you understand how well it’s funded to meet its pension commitments.

The Trustee is responsible for ensuring that the Plan has enough money set aside (assets) to pay pensions built up to date (liabilities). If the assets are more than the liabilities the Plan is said to be in surplus. If the liabilities are more than the assets, it is said to be in deficit.

The Plan’s Actuary carries out a formal, in-depth financial health check of the Plan every three years, called a full valuation. In the interim years the Actuary carries out annual funding reviews, which are approximate updates. Below you can see a summary of the Plan’s financial health since 2021.

WHAT’S THE FUNDING LEVEL?

The funding level is the ratio of the value of the available assets against the calculated value of the liabilities.

The funding level as at 5 April 2024 increased by 1% when compared to 5 April 2023. This was mainly due to additional contributions paid by the Company over the year. Over the year to 5 April 2025 the funding level fell by 2%, due primarily to returns on the Plan’s assets being lower than allowed for in the valuation of the liabilities.

You may have noticed that both the asset and liability values have reduced significantly over time, while the funding level has stayed fairly consistent.

This is mainly due to changes in financial markets and interest rates, which affect how future pension payments are valued and also impact the value of the Plan’s investments. The Plan uses a Liability Driven Investment (LDI) strategy, which helps keep assets and liabilities closely matched. This means that even when their overall size changes, the balance between them remains steady.

You can find more details on the Plan’s funding position and finances in the latest Report and Accounts, available on the Plan website.

THE RECOVERY PLAN

The difference between the funding level and 100% funding is called either a shortfall or a surplus. The Plan relies on contributions from the Company to help remove any funding shortfall. When there is a shortfall, a Recovery Plan is required to bring the Plan’s funding level back up to be fully funded (i.e. 100%).

As part of the 2024 valuation, it was agreed that the Company would make the following contributions to help eliminate the funding shortfall:

£2m by 30 June 2025

£2m by 31 March 2026

£2m by 31 March 2027

£2m by 30 September 2028

The Plan’s administration expenses, insurance premiums, and levies to the Pension Protection Fund are payable in addition.

If a funding shortfall remains at the next full valuation, due as at 5 April 2027, then a new Recovery Plan will be established.

NO INTERVENTION BY THE PENSIONS REGULATOR

The Pensions Regulator has powers to intervene in a Plan’s funding schedule and can impose a schedule of contributions if they feel it’s necessary in order for the Plan to meet the statutory funding objective. We are happy to report that The Pensions Regulator has not used any of these powers in relation to the Plan.

NO PAYMENTS TO THE COMPANY

We can confirm that no payments have been made to any of the participating employers over either the 12 months to 5 April 2024 or the 12 months to 5 April 2025.

WHAT WOULD HAPPEN IF THE PLAN WERE TO BE DISCONTINUED?

This is a legally required statement; there is no intention to wind up the Plan, and the Company remains committed to supporting it.

If the Plan was discontinued, its assets would be used to buy equivalent benefits from an insurance company. As at 5 April 2024, the Plan’s assets would have covered around 86% of the estimated amount needed to buy members’ benefits from an insurance company.

This percentage is less than the funding level because it is a more costly method than providing benefits through the Plan, partly because the insurer needs to make a profit. That’s why the winding-up position is lower than the funding level.

If the Plan wound up voluntarily, the Company would be required to pay in funds to meet 100% of the benefits in this situation. If the Company became insolvent and could not provide sufficient funds to secure 100% of benefits, the Plan would possibly enter the Pension Protection Fund (PPF). You can read more about the PPF at ppf.co.uk