Annex D
Royal Mail Pension Plan (RMPP), Actuarial
Valuation and funding position, 2000 to 2003
POSSS was renamed as Section A and B and POPS
was renamed as Section C when both were merged into the Royal
Mail Pension Plan (RMPP) on 31 March 2000. The sections were run
as separate schemes under the plan because of the different funding
levels then experienced (POSSS in surplus, POPS in deficit).
From 31 March 2003 both schemes were in deficit
positions and as a result were fully integrated and operated as
a single pension plan.
The table below is an extract from the formal
report of the Actuarial Valuation as at 31 March 2003. The aim
is to show in percentage terms the reason for the movement in
the on-going funding level from March 2000 to March 2003. The
main reasons are:
The contribution holiday from Section A/B accounted
for -3.6% change, offset by a 1.1% change from contributions into
section C. The net effect of this change is therefore 2.5%. Based
upon consistent assumptions as used in March 2000, the plan would
have been in surplus (102% funding level) at March 2003
By 2003 however, the real experience of falling
equities had run counter to the assumptions underlying the 2000
valuation—an experience that has been common to all pension
funds. The result was 7.8% fall in the position of the fund.
In addition the March 2003 Actuarial Valuation
used different assumptions from the 2000 Valuation to take account
of the true experience between 2000-03. This change in assumptions
accounted for a further -11.6% change in the funding level.
|
| Funding Level RMPP | %
|
|
| Funding level as at 31 March 2000 |
104.5 |
| Expected factors affecting funding level |
|
| Section A/B contribution holiday | (3.6)
|
| Section C deficiency contributions | 1.1
|
| Funding level as at 31 March 2003 on 2000 basis—expected
| 102.0 |
| Investment market experience | (6.6)
|
| Other unexpected factors | (1.2)
|
| Funding level as at 31 March 2003 on 2000 basis—actual
| 94.2 |
| Changes to assumptions | |
| Inflation reduction from 3% to 2.5% pa
| (0.7) |
| Strengthening of mortality assumptions
| (2.9) |
| Changes in other demographic assumptions
| (0.2) |
| Strengthening of financial assumptions
| (7.8) |
| Funding level as at 31 March 2003 on 2003 basis
| 82.6 |
|
* * *
| 
