The Airbus Section of the Scheme is unaffected by these developments. The next actuarial valuation for that section will be undertaken as at 31 March 2020.
Following the merger on 1 October 2019, the new Trustee Board agreed with the Company to bring forward the actuarial valuation of the BAE Systems Section to 31 October 2019 from the previously scheduled date of 31 March 2020.
The actuarial valuation of the Section showed that it had a funding level of 92% with a deficit of £1.9bn (this is before the £1bn payment). This deficit is by reference to a prudent calculation of the Section's liabilities in accordance with statutory funding requirements.
The Trustee has now agreed a new deficit recovery plan with the Company, with the one-off payment of £1bn to be made in the coming months. That payment represents an acceleration of deficit contributions that would otherwise have been payable in the period to 2026 under the pre-merger recovery plans of all four merging schemes (i.e. the BAE Systems Pension Scheme, the Alvis Pension Scheme, the BAE Systems 2000 Pension Plan and the Shipbuilding Industries Pension Scheme). Furthermore, in line with those recovery plans, c£240m of deficit funding will also still be paid by 31 March 2020 followed by c£250m by 31 March 2021.
Before agreeing the basis and outcome of this actuarial valuation and the new deficit recovery plan, the Trustee took professional advice and consulted The Pensions Regulator.
Later in the year the Trustee will provide Section members with a Funding Update which will include further information about this actuarial valuation.
The effective date of the Section's next actuarial valuation must be no later than 31 October 2022 but the Trustee currently expects that it will be 31 March 2022.
The Trustee is pleased that the Company wishes to pay accelerated deficit recovery contributions as this will enhance the security of benefits for members in the Section.