Commentary on Sections Scheme funding Section 222: The statutory funding objective
795.Subsection (1) requires schemes subject to this Part to be funded to meet a statutory funding objective that they have sufficient and appropriate assets to cover their technical provisions. This requirement reflects the provisions of the IORP Directive.
796.Subsection (2) defines a scheme’s “technical provisions” as the amount required, on an actuarial calculation, to provide for its liabilities. Subsection (3) gives powers to prescribe the liabilities to be taken into account for these purposes and the manner in which assets, liabilities and technical provisions should be determined.
797.Subsection (4) enables regulations to provide for trustees or managers to choose the method and assumptions appropriate for the calculation of their scheme’s technical provisions according to alternative prescribed methods and assumptions, and in line with prescribed principles. The Regulator is required under section 90(2)(d) (codes of practice) to issue a code of practice giving practical guidance to trustees on their duties under Part 3 of the Act, including determining the basis for calculating their scheme’s technical provisions.
798.Subsection (5) prevents a scheme from taking advantage of any provision in the scheme rules that would otherwise permit the liabilities taken into account for the purposes of this Part to be limited to the assets held by the scheme.