FSA reduces pension deficit by 12.5%
UK - The Financial Supervisory Authority (FSA) spent £26m (€38.7m) last year in order to reduce the deficit in its final salary pension plan by £11.4m to £79.9m.
Value of the cash injection to the £289m pension plan was offset by an increase in longevity assumptions as well as under-performance of the scheme assets, the FSA explained in its annual report.
A change in longevity assumptions cost £21m while, the FSA revealed, compared to last year it increased life expectancies at retirement by 3.2 years for workers retiring now and by 2.5 years for workers retiring in 15 years.
An FSA male worker retiring today is not expected to live beyond 26.7 years, whereas a worker retiring in 15 years time is expected to live on for 27.7 years.
Currency movements were the main factor causing the under-performance of the scheme assets.
But the FSA noted that the performance of the underlying assets "was in line with expectations" as the value of plan assets increased by 15.4% including the cash payments made by the FSA.
The fund is currently carrying out a full actuarial valuation, the results of which will be available in the course of this financial year ending in March 2008.
In addition to the non-contributory final salary scheme, which is closed to new members and has 650 beneficiaries, the FSA offers a defined contribution scheme which currently has 1,840 members.