These factors are set by the Trustee on the advice of the Scheme Actuary. The factors are influenced by a range of things, including interest rates, inflation and life expectancy, which can all change over time. As part of the Trustee’s ongoing responsibility and fiduciary duty in the running of the Scheme, these factors are regularly reviewed, typically every three years, to reflect changes in market conditions and the assumptions for what could happen in the future. This is to protect the long-term financial security of the Scheme, so it is able to meet its benefit promises to all members and beneficiaries in the future, as well as ensuring that members receive fair value today based on current economic conditions.
Following the most recent review, the Trustee agreed to change some of the Scheme’s factors, which for the BAE Systems Section came into effect from 1 September 2024. There is a transitional period for actively contributing Scheme members who are retiring directly from employment and their retirement was formally agreed prior to the date of the factor change.