PART 2

Collective benefits

Dealing with deficits and surpluses

Policy for dealing with a deficit or surplus
21
1
Regulations may require the trustees or managers of a pension scheme—
a
to have a policy for dealing with a deficit or surplus in respect of any collective benefits that may be provided by the scheme, and
b
to follow that policy if a valuation report shows a deficit or surplus.
2
For the purposes of this Part—
a
there is a “deficit” in respect of a collective benefit if the probability of the scheme meeting a target in relation to the benefit is below the required range, and
b
there is a “surplus” in respect of a collective benefit if the probability of the scheme meeting a target in relation to the benefit is above the required range.
3
Regulations under subsection (1)(a) may, in particular—
a
require the trustees or managers to consult about the policy;
b
make provision about the content of the policy;
c
set out matters that the trustees or managers must take into account, or principles they must follow, in formulating the policy;
d
make provision about reviewing and revising the policy.
4
The regulations may, in particular, require the policy—
a
to be formulated with a view to achieving results described in the regulations within a period or periods described in the regulations;
b
to contain provision for a deficit or surplus to be dealt with in one or more of a range of ways described in the regulations;
c
to contain an explanation of the possible effect of the policy, or any requirements imposed by regulations under section 22, on members in different circumstances.