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September 2017 Q5iii

  • Thread starter Thread starter LloydieW1990
  • Start date Start date
L

LloydieW1990

Member
Hello

The examiners report to this question includes capping salary at a low level. I can understand why this would result in savings to the overall cost of provision (smaller pensions) but would this actually reduce the SCR from part ii, given that salary is included in both the numerator and denominator of the SCR and so cancels out? The same goes for changing the pensionable salary definition or averaging over a period.

Thanks in advance!

Lloyd
 
The salary is capped for the benefits - in the numerator, but not for the contributions - in the denominator, so they don't cancel out.
 
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