General Questions

---

How is the funding ratio calculated?

The Funding ratio is calculated as total assets divided by present value of liabilities of a pension fund. The funding ratio can increase based on asset levels of the fund, the present value of future pensions (i.e., total liabilities) and because of real returns. The present value of liabilities is calculated by an independent valuator (or Fund Actuary) and the results of the valuation are reported to the Financial Sector Conduct Authority (FCSA) for scrutiny.

What affects the sustainability of the Fund?

The sustainability of the Fund is measured through the funding status of the Fund and this is determined by ensuring that the Fund has enough assets to meet its liabilities. This is an inherent risk for any pension fund, but critical for the EPPF as the Fund does not have a sponsor who is responsible for topping up the fund in the event that assets are inadequate in relation to the present values of its liabilities. The funded status as measured by the funding ratio is included in the annual management scorecard of the Fund.

Investment management fees that are too high or that do not generate a corresponding investment return are not sustainable and can impair the sustainability of the Fund in the long run. These fees must be monitored against appropriate benchmarks and must be justified by outperformance. The annual evaluation of the performance management (as well as the determination of annual bonuses) takes all these sustainability dimensions into account.

What are unclaimed benefits and what is the Fund doing about them?

An "unclaimed" benefit is a benefit that has not been paid to or claimed by a member within 24 months from the date it became due for payment or claiming. The Fund has commenced with electronic and desktop tracing where members or beneficiaries have been contacted telephonically where applicable.