All pension schemes must give members an idea of what would happen in the unlikely event that the sponsoring employer is no longer able to support future funding.
At every actuarial valuation, the Scheme Actuary works out how much of the benefits that all members had built up would be covered by the value of the Scheme’s assets at that date. The Actuary must assume that the Trustee uses the amount it has set aside to buy members’ pensions from an insurance company. The insurance company would then take on the responsibility for paying pensions going forward.
As at 31 March 2021, the estimated cover for the benefits built up would have been around 82%. This is a lower percentage than the funding level because it costs more to buy pensions from an insurance company.
If M&S could no longer support the Scheme, it would be legally required to pay enough funds into the Scheme to secure the total amount of benefits earned with an insurance company. In the extreme situation that M&S could not pay this amount in full, the Pension Protection Fund (PPF) may be able to take over the Scheme and pay compensation to members. The compensation paid by the PPF would not be the same as the level of benefits from the Scheme. More information about the PPF is available at www.ppf.co.uk.