Introduction 1. Summary 2. Introduction 3. Main findings 4. Is final salary provision continuing? 5. Detailed analysis of Reports and Accounts 5.1 Disclosures 5.2 Actuarial assumptions Appendix 1 - Glossary of terms* Appendix 2 - Detailed disclosure listing Appendix 3 - Changes to pension cost accounting

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Accounting for Pensions Survey 2000 
Appendix 1 - Glossary of terms

Actuarial assumptions	In order to carry out an actuarial valuation it is necessary to make a number of assumptions about the future. The most important assumptions are the financial assumptions and these should all be disclosed under SSAP 24. They are the rates of: investment return, salary growth, pension increases and dividend growth.
Investment return	The rate of investment return (ie the rate of interest expected to be earned in the future) is, typically, 6% to 9% pa. In looking at the other financial assumptions it is the difference between the rate of investment return and the relevant assumption that is more important than its absolute value.
Pension increases	The difference between the rate of investment return and the rate of pension increases is, typically, 3% to 5% pa but this will depend on the level of increases actually provided under the scheme.
Salary growth	The difference between the rate of investment return and the rate of salary growth is, typically, 1½% or 3% pa.
Dividend growth	The difference between the rate of investment return and the rate of dividend growth is, typically, 3% to 4½% pa. To gauge whether a particular assumption is optimistic (ie whether it would tend to lead to a lower cost than average) or conservative (ie it would lead to a higher cost), the general rule is: the lower the difference between the investment return and either salary growth or pension increases, the more conservative. For example an assumed difference of 1½% pa between investment return and salary growth is more conservative than 2½% pa. For dividend growth, the higher the difference between the rate of investment return and the rate of dividend growth the more conservative the assumption. For example a difference of 4½% between the assumed rate of investment return and dividend growth is much more conservative than an assumption of 3% pa.
Advance Corporation Tax (ACT)	Until July 1997, when UK companies paid dividends, they paid 20% in Advance Corporation Tax, or ACT, which was then offset against their mainstream corporation tax bill. This could be reclaimed from the Inland Revenue by tax-exempt investors such as pension schemes. From July 1997 this tax reclaim was not available.
Spreading method	There are three main spreading methods used ie:      percentage of payroll      mortgage      straight line Their effect on the pattern of pension costs for a scheme with a significant surplus can vary considerably as the chart shows.
	The straight-line method leads to the greatest initial variation, ie the biggest reduction in pension cost, for a scheme that has a surplus.
Surplus/ Deficiency or Deficit	The difference between the actuarial value of the assets and the value of the accrued liabilities is termed surplus. If the value of liabilities exceeds the value of assets there is a deficiency or deficit.
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