Hi
Just a quick question on the AASCR vs PUSCR:
The AASCR aims for overfunding, the revision notes Q53 asks to “describe 2 situations where when the AAM may not be an appropriate funding method for a small scheme and suggest a more suitable funding method in each case.” The answer to this is part of the core reading, which talks about the follows:
1. Possibility of winding up in the future: as AAM aims overfunding, so this might not be appropriate; and,
2. Where the average age of the membership is due to change sharply, e.g. a large proportion of the membership is due to retire in the near future.
Point 1 makes perfect sense to me; however the core reading re point 2 seems suggesting AASCR could initially be lower than the PUSCR, I just couldn’t get my head round. As this is a small scheme, we expect low movement/membership turnover and therefore future salary roll is likely to be stable. The core reading gives an example of a large proportion of members due to retire in the near future, I expect a decrease in AASCR immediately after these retirements as the result of decreasing in the average age; but surely PUC method takes this into account as well, which would lead to an even lower SCR; in addition, I (maybe falsely) assume as AAM aims overfunding, therefore it should always give a SCR at least equal to that of PUM. Could someone please explain this?
Many thanks.
Last edited by a moderator: Sep 17, 2011