Thank you all for an interesting discussion on what is a tricky, technical topic. It is great to see members taking an active interest in the running of your Society, and sharing their expertise so willingly. Thank you in particular to @MarkC for some very professional insights and explanations.
When we launched this category, it was intended to capture your questions for the AGM, in the same way we gather your questions in advance for an AMA, so we can do the necessary research and bring you considered replies not just from the Community team but from senior staff and the Board.
The AGM is still about 3 weeks away, so there is still plenty of time to gather your views and questions, but since this issue has been of particular interest, we have been able to bring this forward and I’m very happy to share the following response from The Society:
The Society’ s defined benefit pension scheme was closed to new entrants in 2007 and closed to all new accruals from May 2017. The scheme is a separate legal entity to The Society and is overseen by a board of Trustees who manage all elements of the scheme and determine, after taking appropriate professional advice, matters such as investment strategy.
As the liabilities of the scheme currently outweigh the assets, the accounts of The Society reflect an accounting estimate of the scale of the deficit at the balance sheet date and movements compared with last year. The accounts also note the deficit on the scheme calculated in the triennial valuation, which is prepared on a more prudent basis. The size of the accounting and triennial deficits go up and down according to market conditions, in particular inflation, interest rates and the yield on corporate bonds and gilts, meaning that the deficit could worsen or indeed it could reduce or the scheme could go into surplus.
Benefits payable to members of the scheme are set in the scheme rules. Over recent years, The Society has taken what steps it could to manage the future liabilities under the scheme by working with the Trustees to change the rules as appropriate. When all other viable and effective options to manage future liabilities had run out, The Society closed the scheme in 2017.
The financial statements of The Society for the year ended 27 January 2017 dealt at length with adjustments needed when we learned, shortly before the year end, of a legal error made in 2010. We were advised that the change to the rules that was made in 2010, which was made in good faith and on the basis of legal advice at the time, was not valid in relation to pensionable service before the date of the change. We are not at this stage able to provide any more information to members about the legal error in 2010.
The financial statements in this year’s Annual Review, for year ended 26 January 2018, reflect adjustments relating to the closure of the scheme.
Pensions are a very complex area but we hope that this will go some way to reassure you that The Society and Trustees have acted competently and in good faith at all times and have taken appropriate professional advice in this matter.