In its responses to technical queries, the Pensions Regulator (TPR) has recognised that, for many schemes with a valuation date around 31 March 2009, deficits have significantly reduced to date as the actual asset return has far outstripped the return assumed in the technical provisions.

On its website, TPR notes that pensions legislation does permit allowance for post-valuation developments in recovery plans, but in normal market conditions trustees should be cautious about taking account of upward fluctuations as this may well not be in members’ interests. However, given the extreme conditions in March and April 2009, TPR considers that for some schemes it may be reasonable to take into account some of the increases in asset values in the recovery plan.

In practical terms, favourable asset returns may be reflected in the recovery plan and the schedule of contributions by asking the scheme actuary to update figures from the effective date to reflect actual scheme experience.

TPR states that any allowance for post-valuation developments must be in accordance with the statement of funding principles and in the best interests of members. It also emphasises that this view has been reached in relation to the specific market events and will not automatically apply to situations arising in future.

View the technical queries page.