The initial valuation results showed a modest increase in the deficit compared with the position three years ago, requiring an increase in employer contributions.
The trustees were keen to obtain some downside protection, and felt a solution which avoided any short term increase in employer contributions might be desirable to the employer.
The trustees had a flightpath for the scheme, which involved de-risking gradually over the period from 2020 to 2040. Delaying the start of de-risking to 2025, and maintaining the 2040 end date, reduced the technical provisions to the point where no additional contributions would be required from the employer.
To be sure that any deficit that arises in future will be funded by 2025, so the Trustees can start de-risking as planned, the funding position will be measured each year on the anniversary of the valuation date. If there is a deficit a one-off contribution will be paid by the sponsor, equal to the amount of that deficit divided by the remaining term to 2025.
The requirement to pay these additional contributions would be formally set out in the schedule of contributions, so it would be legally binding.
The trustees have confidence that they will be fully funded and able to start de-risking in 2025. The employer can manage its shorter term contribution requirements, and only expects to pay additional contributions if these are required.