To determine the underfunding risk factor (U) in the risk-based levy calculation, we first establish the funding level of a scheme as follows:
funding level = value of Assets x 100
value of Liabilities
The value of assets is inclusive of any type B or C contingent assets or deficit reduction contributions.
In 2008/09 and 2009/10
If your funding level is less than 120 per cent, your underfunding risk is calculated as the difference between 121 per cent of the value of the liabilities and the value of the assets:
U = ( 1.21 x L ) – A
If your funding level is above 120 per cent your underfunding risk is calculated as a fixed percentage of liabilities:
|
funding percentage: |
U as a percentage of liabilities: |
|
120 ≤ f < 125 |
1 |
|
125 ≤ f < 130 |
0.75 |
|
130 ≤ f < 135 |
0.5 |
|
135 ≤ f < 140 |
0.25 |
|
f ≥ 140 |
0 (zero risk-based levy) |
In 2006/07 and 2007/08
If your funding level is less than 104 per cent, your underfunding risk is calculated as the difference between 105 per cent of the value of the liabilities and the value of the assets:
U = ( 1.05 x L ) – A
|
funding percentage: |
U as a percentage of liabilities: |
|
104 |
1 |
|
104 ≤ f < 111 |
0.75 |
|
111 ≤ f < 118 |
0.5 |
|
118 ≤ f < 125 |
0.25 |
|
f ≥ 125 |
0 (zero risk-based levy) |