Other risks [28]

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Bullet points include: Illustrative DB Final Salary Scheme, closed to new accrual, no discretionary benefit increases, target funding level of 100%, deficits/surpluses versus target amortised 20% each year. Funding ‘valuation’ includes discount rate 1.2% pa higher than wind up valuation (equity risk premium – asset strategy 60% equities). See www.nematrian.com/EntityWideRiskManagementForPensionFunds.aspx. Priority on wind up. Benefit value on wind up basis,  assuming actual recovery (if sponsor defaults) is 100%. Market implied default rate: Active*. Deferred. Pensioner. * Active members benefit from salary inflation above price inflation, and hence receive higher eventual benefits the longer the scheme does not wind up

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