“At 31 March 2019, the Trust’s assets were over 100% of the funds required to meet expected future funeral costs covered by the plans.”
As the appointed Actuary to the Golden Charter Trust Funds, I report at least annually to the Trustees regarding the ability of the Trust Fund to meet its liabilities for maturing funeral plans.
As at 31 March each year, a full and detailed actuarial valuation is undertaken. Additional updates are also provided by me during the year to the Trustees as requested.
The valuation addresses the question of whether or not, in my opinion, the assets in the Trust will be sufficient to meet the expected future plan values paid to funeral directors for all plans in force at the valuation date. In carrying out my valuation, I perform the following three steps:
1. I project the expected payments or cashflows out of the Trust in respect of future maturities from existing plans allowing for expected increases in plan values and expected rates of mortality of plan holders.
2. I discount these future expected cashflows to a net present or capital value at the valuation date. The discount rate used is a prudent estimate of future investment returns expected to be earned by the underlying investments of the Trust net of tax and expenses.
3. I compare the net present value of the discounted payments with the market value of the assets at the valuation date to determine the funding level, which is the ratio of the value of the assets to the capital value of the expected future payments from the Trust.
On the basis that the assumptions underlying the actuarial valuation are borne out in practice, a funding level of over 100% means that then the assets will be sufficient to meet the expected future plan values paid to funeral directors.
The most recent full valuation at 31 March 2019 showed that the Trust’s assets were over 100% of the funds required to meet expected future funeral costs covered by the plans in the Trust, allowing for increases in funeral costs in line with future levels of inflation as measured by the Consumer Price Index.
Partner, Barnett Waddingham LLP, Consultant Actuaries