Skip to main content

Your browser is out of date, and unable to use many of the features of this website

Please upgrade your browser.


This website requires cookies. Your browser currently has cookies disabled.

Example of trustee assessment of maximum affordable contributions

A. N. Example Pension Scheme

The trustees have assessed the reliability period as: 5 years

The maximum affordable contributions after deducting deficit repair contributions (DRC) over this period total: £2,989,750

The following table summarises the key inputs and assumptions in reaching this figure:

Free cash flows DRCs Investment in
sustainable growth
Shareholder distributions Payments to
other DB schemes
discretionary costs
FY22   Previous year 2,400,000 (1,500,000) - (250,000) - - -
FY23 Reliability
Current year 2,500,000 (1,500,000) (500,000) (250,000) - - 250,000
FY24 Yr1 2,300,000 (1,500,000) (500,000) (250,000) - - 50,000
FY25 Yr2 2,600,000 (1,500,000) - (275,000) - - 825,000
FY26 Yr3 2,700,000 (1,500,000) - (302,500) - - 897,500
FY27 Yr4 2,800,000 (1,500,000) - (332,750) - - 967,250
Total over reliability period
12,900,000 (7,500,000) (1,000,000) (1,410,250) - - 2,989,750


  • Forecast free cash flow, sustainable growth and shareholder distribution information was obtained from management on 22 August 2023.
  • No other forms of covenant leakage, discretionary payments or payments to other DB schemes were identified.
  • Key adjustments were discussed with management on 12 September 2023 - as set out below.


  • Investment in sustainable growth in current year and next year relates to new production lines which are forecast to improve employer production and cost efficiency in year 2 onwards.
  • Increased production and cost savings are expected to increase sales and market position and will improve covenant support.
  • This investment is expected to complete by the end of next year and will drive a steady increase in the level of employer free cash flows in the following years.
  • No other investments in sustainable growth projects are anticipated.
  • The trustees consider that shareholder distributions would not be reduced by management to support scheme funding in the event that the scheme required additional contributions.
  • Following a period where dividends were kept fixed to partially fund sustainable investment (discussed above), these are expected to increase by around 10% per annum in the future.
  • The net impact is that, despite limited levels of 'maximum affordable contributions' in the next two years, this should increase substantially from FY25 onwards.