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April 06 Q1 (v)

N

Nossy

Member
In the ASET solution to part (v)(b), it says that the proposals will have a different impact on each scheme, and in particular, is likely to be more advantageous for Scheme B than for Scheme A.

I thought it would be more advantageous to Scheme A which will improve in security because of the better funding level post merger - am I missing something here?? :confused:
 
Hi Nossy

This statement also appears on the examiners' report for this exam - although I think it may well be a typo on both the ASET and the examiners' report. The security of benefits in Scheme A is improved by the increased funding level - whereas it is likely the security of Scheme B members is worsened on most funding bases. Scheme A members may be more hit by some of the changes proposed to future service I suppose (particularly the change to the NRA) but I think that overall I would say the transfer is more beneficial to Scheme A's members and Trustees rather than Scheme B's.
 
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