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DB scheme return checklist

Hybrid scheme return checklist

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DB scheme return: questions and answers

  • What financial information about my scheme do I need to supply?

    If your scheme is defined benefit in nature, you'll need to have the market value of assets and a buy out valuation to hand:

    Market value of assets

    The market value of assets can be found in the annual scheme accounts. The scheme's most recent actuarial valuation is required when completing the section 179-related questions.

    A buy out valuation

    A buy out valuation assesses the potential cost of securing the scheme’s liabilities with insurers.

    The buy out liabilities should be consistent with the benefits valued for technical provision purposes, ie if some insured benefits have been excluded for technical provision purposes they should also be excluded from the buy out figures.

    If you have included some insured benefits in the technical provisions, the value of the insured benefits on the technical provisions basis should be included in the Part 3 Scheme Funding assets.

    Asset breakdown information submitted in this section is used in the calculation of the Pension Protection Levy – it affects the roll-forward, smoothing and investment risk-based levy. Incorrect allocation could affect your levy. This information should be taken from the scheme’s most recent audited accounts.

  • Should I base my response to the FRS17/IAS19 liabilities question on the values in the scheme's principal employer's accounts?

    Yes. This should be based on the number used in the employer's audited accounts. FRS17/IAS19 liabilities can be found in the employer's latest published accounts.

    The principal employer is the employer named in the scheme’s latest trust deed and rules. The principal employer usually has powers to, for example, appoint trustees to the scheme, amend the scheme rules or wind up the scheme.

  • What are the different types of multi-employer schemes?

    There are two broad types of multi-employer schemes: non-segregated schemes and segregated sectionalised schemes.

    Within each type of multi-employer scheme, there are then three further categories depending on scheme requirements when an employer ceases to participate:

    1. Schemes with a requirement to segregate.
    2. Schemes with discretion to segregate.
    3. Schemes with neither a requirement nor discretion to segregate.

    You should tick one option only from the above categories to define the structure of your scheme. Where the rules provide for both a) an option to segregate in some circumstances and, b) a requirement to segregate in other circumstances, you should choose option a).

    You should consider obtaining legal advice before completing this section, if necessary.

  • What does the term 'weighted' mean regarding the average age of scheme members?

    The 'weighted average age' is the average age across the membership that has been calculated in such a way that more allowance (or more 'weight') is given to an age of a member with greater liabilities.

  • What does period life expectancy and cohort life expectancy mean?

    Expectations of life can be calculated in two ways: ‘period life expectancy’ or ‘cohort life expectancy’. For more information go to the Government Actuary's Department's information on period and cohort expectations of life.

    Period @ 65 - this is the expected age at death for a 65-year-old if post valuation date improvements are assumed to be zero.

    Cohort @ 65 - this is the expected age at death for a 65-year-old pensioner at valuation date allowing for future improvements.

    Cohort @ 45 - this is the expected age at death for a 65-year-old pensioner on retirement 20 years after valuation date allowing for future improvements.

  • What information on cohort and period life expectancy do I need to provide?

    It is the cohort expectancy implied by the tables used - it doesn't matter whether the tables used are C= or U= or involve the cohort adjustments.

    Example 1: If PMA92 tables with year of birth and long cohort is adopted for both current and future pensioners

    Formally this is PMA92lc(U=2008)

    Period life expectancy for a 65-year-old now

    = life expectancy for a 65-year-old using the 92 tables with long cohort projections to CY 2008 = 86.0

    Cohort life expectancy for a 65-year-old now

    = life expectancy for a 65-year-old using the 92 tables year of birth=1948 with long cohort = 88.7

    Cohort life expectancy at 65 for a 45-year-old now

    = life expectancy for a 65-year-old using the 92 tables year of birth=1968 with long cohort = 89.8

    Example 2: Where current pensioner assumption is PMA92 long cohort to CY 2020, where future pensioner assumption is PMA92 long cohort to CY 2030

    Formally this is PMA92lc(C=2020/2030)

    Period life expectancy for a 65-year-old now is unknown if no decision has been made on split between base and improvement. We expect that most will regard their approach as an approximation to 92lc YoB and hence put in 86.0

    Cohort life expectancy for a 65-year-old now

    = life expectancy for a 65-year-old using the 92 tables long cohort projections to 2020 = 88.3

    Cohort life expectancy at 65 for a 45-year-old now

    =life expectancy for a 65-year-old using the 92 tables long cohort projections to 2030 = 89.2.

  • What information are you collecting on GMPs?

    We ask whether the scheme liabilities include Guaranteed Minimum Pensions (GMPs).

    If the answer is yes, we ask you to provide the Scheme Contracted-Out Number (SCON).

  • Where will I find details of the SCON?

    When the scheme became contracted-out HM Revenue and Customs (HMRC) (or its predecessor, the Inland Revenue) will have issued a contracting-out certificate. The Scheme Contracted-Out Number (SCON) is shown at the top of the certificate.

    A SCON reference number is issued to you by the National Insurance Services to Pensions Industry (NISPI).

    You must enter it in the correct format, which is: the letter S, followed by 0 or 1 or 2 or 4 or 6 or 8, followed by six numbers, followed by a letter.

    For more information contact the HMRC contracted out pensions helpline on 0300 200 3507.

  • My scheme has more than one NPA, what figure should I input on the scheme return?

    Where more than one Normal Pension Age (NPA) applies, we would like schemes to input the age that applies to the largest proportion of liabilities.

    You should only include active and deferred members for this calculation. You shouldn't include pensioners and dependants.

  • What is the difference between scheme membership and employer membership?

    For scheme membership complete the membership table with the number of members in the pension scheme for each of the categories (active, deferred and pensioner). Only count each member once. (For example, if a member has both active and deferred benefits, only count the member once as an active member).

    For employer membership, provide the current number of members that hold a defined benefit entitlement within the scheme. Include any members who have defined contributions with defined benefit underpin, defined benefits with defined contribution underpin, defined contributions with guaranteed minimum pension, and equivalent pension benefits.

    Include annuitants (excluding dependants for scheme membership and including dependants for employer membership) where the annuity has been bought in the name of the trustees. Where a dependant is not in receipt of a benefit from the scheme they are not counted as members. Exclude any death benefit only members, dependants (spouses and children) and annuitants where the annuity has been bought in the name of the member.

  • My scheme is not a hybrid but I'm asked to answer hybrid details question. What should I do?

    If your scheme is not a hybrid (a scheme with a mixture of defined benefit and defined contribution elements), please contact us as soon as possible as we may need to re-issue the scheme return.

  • I have a new s179 valuation. Should I be updating the existing details or adding a new valuation?

    If you have a more up-to-date section 179 valuation available, please add the details as a new valuation.

  • I'm unable to submit the scheme return by the due date, can I get an extension?

    The scheme return notice contains a 'due date' which cannot be changed. There isn't an automatic penalty for not submitting the scheme return by the due date. However, a trustee who's 'failed to take all reasonable steps to secure compliance' may be liable to a penalty.

    We will automatically issue an overdue notice if the scheme return is not submitted one week after the due date. We will consider taking further action against trustees who are non-compliant where this is appropriate and proportionate.

    If you're waiting for information from a third party (eg an insurer), you should keep pressing them for the information. As a trustee, you're responsible for completing the scheme return.

    If the scheme has fully commenced winding-up and you expect the process to be completed shortly, you do not need to fully complete the scheme return. Provided that the scheme is wound up before the deadline for the completion of the scheme return.

    We're committed to helping trustees meet their statutory requirement. If there's anything we can do to help, or if your scheme return submission is delayed beyond the due date, please contact us.

DB scheme return: example form

Scheme return enquiries

Phone:  0345 600 5666

Or you can write to us.