As at 31 March 2024 the Scheme’s liabilities had decreased. At the same time, the asset values had decreased, but are still more than the liabilities meaning that the Scheme remains in surplus.
This drop in assets and liabilities was largely due to the increase in interest rates the UK has experienced over the last few years. When interest rates increase, the amount the Scheme needs to pay future pension payments reduces. At the same time, the value of certain investments in the Scheme’s assets, such as government bonds and insurance policies, held to match the value of future pension payments, also decrease in value.
Despite the drop in values of the assets and liabilities, the Scheme’s funding level was stable and remains above 100%. This reflects the Scheme’s investment strategy, which is designed so that movements in the assets and liabilities are broadly matched.
It’s important to be aware that a surplus doesn’t mean the Scheme has more money than it needs. The value of the Scheme’s assets can go up or down over time and the assumptions used to work out the liabilities might change in the future too. A surplus provides the Scheme with some protection against these changes. And it tells us that it is currently in a healthy financial position, holding enough money to pay all pensions now as well as those that will fall due in the future.