AA Pension Scheme

An update on the arrangements in place to support the benefits you have built up in the Scheme.

As Trustees, we work with the AA to make sure the Scheme has sufficient funds to pay the benefits that members have built up, whenever they need to be paid. This amount is the Scheme’s ‘funding target’.

To help us understand how our plans are developing, the Scheme Actuary carries a detailed check of the Scheme’s finances at least once every three years — a process called a valuation. This process compares the funding target with the money that is building up in the Scheme from contributions and investment returns (its ‘assets’). The valuation also helps us to identify and agree, with the AA, on the level of contributions the Scheme needs to receive to support the benefits that members have built up.

In the years between valuations, the Scheme Actuary provides us with less formal updates. These updates do not go into the same level of detail as a valuation, but they allow us to monitor changes in the funding level and take any steps that might be appropriate.

We share the results of our valuations and updates with you in our summary funding statements. This summary funding statement contains:

  • The results of the latest valuation at 31 March 2022; and
  • A recap of the Scheme Actuary’s last update at 31 March 2021.

There is other information we want to bring to your attention. The noticeboard section includes a reminder about the dangers of pension scams and how you can keep your benefits safe, and the importance of making sure we hold up-to-date information about you and the people who matter to you.

If you have any questions about this update, or if you need more information and can’t find what you need on the Scheme website, please get in touch

Steve Delo
Chairman of the Trustee

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At 31 March 2022, the triennial actuarial formal valuation was undertaken and the ongoing funding position of the Scheme is shown below.

The result is that at 31 March 2022, the Scheme’s funding level had slightly improved to



The Scheme’s assets:


The amount needed to provide members’ benefits:


The shortfall (or ‘deficit’):


The funding level:



The Scheme’s assets:


The amount needed to provide members’ benefits:


The shortfall (or ‘deficit’):


The funding level:



The Scheme’s assets:


The amount needed to provide members’ benefits:


The shortfall (or ‘deficit’):


The funding level:



The Scheme’s assets:


The amount needed to provide members’ benefits:


The shortfall (or ‘deficit’):


The funding level:


Change in funding position since the previous update in 2021

In late 2021, we provided you with the annual update on the Scheme’s funding position at 31 March 2021. The info graphics above show the funding position as 31 March 2022, following the triennial actuarial formal valuation.  You can also view the funding positions for the previous three years by clicking on the relevant year.

The Scheme’s assets increased slightly in value over the year to 31 March 2022. This was due mainly to the contributions the AA paid during this period and a small level of outperformance in the Scheme’s assets.

However, the amount needed to provide members’ benefits decreased slightly, mainly due to a combination of a slight increase in long-term interest rates and changes to the assumptions agreed for the 2022 actuarial valuation, primarily a lower outlook for future life expectancy which has reduced the amount required to provide benefits.

The result is that at 31 March 2022, the Scheme’s funding level had improved to 98%.

Change in funding position since the previous update in 2022

You may well be aware of the turbulence in financial markets following the then government’s “mini-budget” in late September 2022, and of press reports, to the effect that the rapid rises in interest rates were causing problems for pension schemes.

The Scheme did not escape from this totally unscathed and the Scheme’s funding position is estimated to have deteriorated since 31 March 2022. The rising interest rates have operated to reduce the valuation of the scheme liabilities (we do not need to put away so much as a store to pay future pensions if increased interest rates are going to make it grow faster). But the Scheme’s investments have lost value, and by a greater amount, than the fall in value of the Scheme’s liabilities. We will share further details in next year’s funding statement to members.

The Scheme is closed to the future build-up of benefits from 1 April 2020. All pension benefits accrued up to 31 March 2020 are unaffected and will increase, broadly in line with UK price inflation up to certain limits, until you start taking retirement benefits.

The AA’s support

Following the 2022 valuation, the Trustees and the AA agreed on a plan to help make up the funding shortfall by 31 July 2025.

Under this plan, the AA agreed to continue paying the deficit contributions agreed as part of the valuation at 31 March 2013. 

  • These annual contributions started from 1 November 2013 at £12.2 million and increase each year in line with the Retail Prices Index. At 1 April 2023, the annual contribution was £16.2 million. 
  • These contributions will continue up to 31 July 2025. If the Scheme still has a deficit at that time, the contributions will be made available up to 31 October 2038 (the original end-date agreed following the 2013 valuation).
These deficit contributions are being paid from an asset-backed funding arrangement which is secured against the assets of AA Brand Management Limited, which owns the AA group’s intellectual property. If this funding arrangement is unable to pay any of the deficit contributions in full, the AA is required to pay the balance.

In addition, AA also agreed to pay contributions (in monthly instalments) of £1,000,000 per month up to and including July 2025.

£8.25 million

over the period from 1 April 2019 to
31 January 2020

£0.8 million

in respect of February 2020

£10 million

over the period from 1 April 2020 to
31 March 2021

£11 million

over the period from 1 April 2021 to
31 March 2022

£12 million

each year over the period from
1 April 2022 to
31 July 2025

From 1 February 2020, the costs of running the Scheme have been met from the Scheme's assets and not paid directly by the AA.

A different view

The figures presented assume that the Scheme continues in its current form. This is called the ‘ongoing’ basis.

However, as part of the valuation, we are required to look at the funding position if the Scheme ended and had been wound up on the valuation date. The Trustee is required by law to provide you with this information. This does not imply that there is any intention of winding up the Scheme.

This view of the funding position is known as the ‘full solvency’ basis, and it assesses how much money would be needed to buy insurance policies to provide all members’ benefits at once.

As a rule, this tends to cost more than gradually providing benefits into the future as they become due to members. This is because insurance companies are obliged to take a very cautious view of the future and need to make a profit. The cost of securing pensions in this way also incorporates the future expenses involved in administration. As a result, the full solvency funding level is generally lower than the ongoing funding level — which is the case in the Scheme.

  • At the 31 March 2022 valuation, the statutory estimate of the solvency deficit was £1,060 million. This means that the amount needed to meet the members' benefits on the 'full solvency' basis exceeded the assets by this amount. This is equivalent to a funding level of 71%.
  • The estimated amount needed on 31 March 2022 to ensure that all members’ benefits could have been paid in full if the Scheme had started winding up (full solvency) was around £3,631 million. As mentioned above, the Trustee is required by law to provide you with this information.
March 2022 Deficit £1,060 Funding level 71%

If the Scheme was wound up and the AA was unable to meet the full cost of securing members’ benefits with an insurance company, the Pension Protection Fund (PPF) might be able to take over the Scheme and pay compensation to members.

There is more information about the PPF on its website at ppf.co.uk. Or you can write to:

The Pension Protection Fund
12 Dingwall Road

Other information we need to give you

The Scheme has not made any payments to the AA since our previous summary funding statement in late 2021 which covered the year from 1 April 2020 to 31 March 2021.

The Pensions Regulator has the power to change the running of UK pension schemes, change the way they are funded or impose a schedule of contributions. The Regulator has never had to use its powers in this way for the Scheme. Learn more online at The Pensions Regulator

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Are you scam smart?

Your pension benefits are valuable and — unfortunately — a lucrative target for scammers. The scammers’ tactics are sophisticated and their ‘offers’ often appear convincing, which can make it difficult to know if you have been targeted.

The good news is that there is a lot of support available to help you spot the warning signs and steer clear of the scammers. This includes the resources on the Financial Conduct Authority (FCA) website, which also explains the steps to take if you think you have been scammed.

If you have not already done so, take a few minutes to visit the FCA website and equip yourself with the knowledge and tools you need to stay scam smart.

The benefits that the Scheme provides are likely to be appropriate for most members. However, if you are a deferred member, you have the option to transfer your Scheme benefits to another pension arrangement if you think this is the right decision for your circumstances.

If you are thinking about a transfer and your transfer value is £30,000 or over, you will be required to take advice from a regulated financial adviser before the Trustee can let the transfer go ahead.

When choosing an adviser, make sure they have adopted the Pension Transfer Gold Standard. This voluntary code of good conduct is designed to give you confidence that you are dealing with an ethical firm that will give you honest advice about whether you should transfer your benefits. There is more information about the Pension Transfer Gold Standard on the Personal Finance Society website.

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Tell us who matters to you

The Scheme was established to help you build up benefits for your retirement. However, in certain circumstances it will also provide benefits for the people who matter to you in the event of your death. The actual benefits payable will depend on whether you are a deferred member or drawing your pension but may include a cash sum for your nominated beneficiaries and pensions for eligible dependants.

Where a cash sum is paid, the recipients will be chosen at the discretion of the Trustee. In this way the benefit can be paid tax free and does not form part of your estate for Inheritance Tax purposes. When the Trustee makes its decision, it will consider the beneficiaries you have nominated on your Expression of Wish Form (although your wishes are not binding on the Trustee).

If you have not yet logged in to the Scheme website to complete an online Expression of Wish form, please could we ask you to do this as soon as possible.

If you have previously completed an Expression of Wish form, please take a moment to check that the information on it is up to date. If you need to make changes, you can do this online.

If you have previously completed an Expression of Wish in paper form, the Trustee would still ask that you enter your wishes online.

Secure login directions

Your personal data

We need to collect and use personal information about members and their survivors so we can run the Scheme efficiently. Our formal Privacy policy explains how we collect, use and protect your personal information, as well as your rights in relation to this information.

In providing actuarial services to the Trustee, including the preparation of the summary funding statement above, the Scheme Actuary (Aon Solutions UK Ltd) requires access to personal data about members and their dependants. The Data Protection Act governs how this data should be shared and stored. There is more detail about this online.

If you have any questions about your personal information and how it is used, please contact the Trustee in the first instance. Trustee contact details can be found in the Scheme booklet or regular communications such as this.

The Information Commissioner’s Office provides general guidance about the use of personal data.

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The Scheme website

If you have any questions about the Scheme or your benefits, this website should be your first port of call.

The Scheme Administrators

If you cannot find the information you need online, or want to speak to someone, please contact Aon, the Scheme Administrators.

AA Pension Scheme
Aon Solutions UK Limited
PO Box 196

0345 850 6406 (you will need to answer some security questions)