5.—(1) Subject to paragraphs (2) and (3), it is for the trustees or managers of a scheme to determine which method and assumptions are to be used in calculating the scheme’s technical provisions.
(2) The method used in calculating a scheme’s technical provisions must be an accrued benefits funding method.
(3) In determining which accrued benefits funding method and which assumptions are to be used, the trustees or managers must—
(a)follow the principles set out in paragraph (4), and
(b)in the case of a scheme under which the rates of contributions payable by the employer are determined—
(i)by or in accordance with the advice of a person other than the trustees or managers, and
(ii)without the employer’s agreement,
take account of the recommendations of that person.
(4) The principles to be followed under paragraph (3) are—
(a)the economic and actuarial assumptions must be chosen prudently, taking account, if applicable, of an appropriate margin for adverse deviation;
(b)the rates of interest used to discount future payments of benefits must be chosen prudently, taking into account either or both—
(i)the yield on assets held by the scheme to fund future benefits and the anticipated future investment returns, and
(ii)the market redemption yields on government or other high-quality bonds;
(c)the mortality tables used and the demographic assumptions made must be based on prudent principles, having regard to the main characteristics of the members as a group and expected changes in the risks to the scheme, and
(d)any change from the method or assumptions used on the last occasion on which the scheme’s technical provisions were calculated must be justified by a change of legal, demographic or economic circumstances.