Actuarial valuation. "If the very mention of this sends shivers down your spine then read on," says Spence & Partner's Marian Elliott.

There is a lot to look forward to at this time of year. The end of March will bring longer daylight hours, the promise of slightly warmer temperatures and, for many trustee boards and companies, the process of carrying out an actuarial valuation of their pension scheme will begin.

If the very mention of this sends shivers down your spine then read on. Whilst there are no magic potions which can shrink your deficit or take the sting out of the valuation exercise, there are actions which you can take to improve the way in which the valuation process is managed and deliver better results for both the company and trustees:

- Get results early: Do not spend 70% of your time and budget working out the scale of the problem. The year is 2013 and actuarial calculations can be done quickly. Insist that you are given figures as close to the effective date as possible to allow proper time to be spent on developing a solution.

- Engage with the process: Actuarial jargon, yield curves and discount rates do not make for exciting reading but understanding the basis on which liabilities are calculated will help all parties to have a more meaningful discussion about potential scenarios and the risks posed by the scheme to the company (and vice versa). Set aside time in a trustees' meeting for your actuary to explain the assumptions, where they come from and why they are needed… specify that the explanation should be jargon free and in plain English!

- Spend your budget wisely: Conduct an exercise to identify the key risks for your scheme – do you have a struggling employer, is the investment strategy failing to keep pace with your liabilities year on year, are the contributions required at the upper end of what is affordable, is the quality of your data questionable? Whichever your key risks are, spend a larger proportion of your time and budget in ensuring you fully understand them, have mitigation plans in place and have adequately allowed for their potential impact in any funding plans.

- Understand where you are going: If the trustees and company do not have clear, agreed and measurable objectives for the future of the scheme then it is unlikely that any meaningful management plan can be put in place. It also means that there is a risk of failing to identify when objectives have been met and therefore missing opportunities to crystalise that position.

- Consider all options: There is so much good work being done in developing solutions outside of straight cash funding. Make sure your advisers have raised these with you and discussed the merits and limitations in relation to the circumstances of your scheme.

Instead of an exercise to be endured, the actuarial valuation can be an opportunity to have a meaningful discussion with all parties about where you are, where you want to be and the best way of getting there.

Written by Marian Elliott, director, Spence & Partners

Marian_Elliott@spenceandpartners.co.uk