The purpose of a valuation is to calculate the value some or all of the following
o The value of assets
o The value of accrued benefits
o The value of benefits expected to be accrued in the future
o The value of contributions expected to be paid in the future
o Any of these under a different scheme structure
and to use the values calculated to answer questions which aid decision making. The values calculated depend on the method, assumptions and data used. The choice of these depends on the purpose of the valuation and who we are doing it for. The main two questions asked are
o Are the funds adaquate to provide the benefits promised
o What contribution rate is required to fund benefits in the future
Other questions include
o Are the funds adaquate if the sponsor becomes insolvent
o What is the liability profile, so that we use the funds to match it
Possible groups include the state and state bodies, the sponsor and investors, the beneficiaries, and facilitators.
We will look at possible choices for the methods, assumptions and data, go on to look at valuations required by approved UK employer schemes, and end by looking at related tasks such as analysis of surplus and the valuation of options and guarantees.