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CARE scheme

S

Seeker

Member
hi, I am an overseas student and would like to know which funding method to use to calculate contribution rate for a CARE scheme?
 
Hi

You can use any method PUC, CUM, AAM. At the moment companies are using the PUC method as that will provide a secure contribution rate and will not be expensive for them.

For example the AAM will look at the total future service and therefore will be costly in the future for the scheme.

I hope this answers your question.
 
Funding methods

Hi Seeker

Following on from rave23's answer, whether the scheme is CARE or final salary does not make a difference. All options open to a final salary scheme are also open to a CARE scheme

For the Statutory Funding Objective in the UK, you need to use an accrued benefits funding method - ie Projected Unit or Current Unit methods.

For CARE, the two methods (PU/CU) will give similar rates if the rate at which a member's benefit revalues in active service is similar to the rate of deferred revaluation.

Hope that helps

Best wishes
Stuart
 
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