Valuation Guidance 


Calculations required under:

Section 143 (valuations and funding determinations)
Section 152 (valuations and funding assessments)
Section 156 (valuations)
Section 158 (valuations)
Section 179 (valuations)

 

PPF compensation cap

DWP has introduced an increase to the compensation cap for members with long service. This came into effect on 6 April 2017. s179 and s143 valuations with an effective date (the date at which the assets and liabilities are calculated) on or after 6 April 2017 should use the increased compensation cap for affected members regardless of when the valuation is signed. This also applies to s152, s156 and s158 valuations.

Section 143

 

Section 143 valuations

This section is relevant for actuaries undertaking a valuation to determine the level of a scheme’s funding in accordance with section 143 of the Pensions Act 2004. The purpose of the valuation is to determine whether the Board of the Pension Protection Fund should take over the responsibility for a particular scheme.

The guidance for undertaking a s143 valuation, version H6, should be used for all valuations with an effective date on or after 6 April 2017. Valuations signed on or after 10 November 2011, which show a funding level greater than 100 per cent must contain an explicit statement that allowance for GMP equalisation would not change the funding level to less than 100 per cent, where GMP equalisation hasn't already been allowed for in the calculations.

Guidance for undertaking the valuation in accordance with Section 143 of the Pensions Act 2004 (version H6, April 2017)

Additional information for carrying out a Section 143 valuation

The guidance on assumptions to use when undertaking a s143 valuation is updated periodically. Version B7 should be used for all valuations with an effective date on or after 1 December 2016.

Guidance on assumptions to use when undertaking a valuation in accordance with Section 143 of the Pensions Act 2004 (version B7, December 2016)

Certificate for the Purposes of section 143 of the Pensions Act 2004 as set out in our guidance, for inclusion in the s143 valuation report

Data and Liability Information spreadsheet (Section 143 valuations)  - please provide an electronic Excel version of the completed data and liability spreadsheet when submitting s143 valuations. If prompted, please SAVE the spreadsheet rather than opening.

Data and Liability Information spreadsheet (Section 143 valuations) EXAMPLE - If prompted, please SAVE the spreadsheet rather than opening.


You can also view guidance that was valid for previous periods.

For further information on s143 valuations, please see slides from a workshop for actuaries on preparing s143 valuations, or the s143 valuation FAQs in our FAQ database. 

 

Funding determinations

The PPF is permitted to make a funding determination without the need to obtain a section 143 valuation under changes to the Pensions Act 2004. These changes were made by The Pension Protection Fund (Miscellaneous Amendments) Regulations 2012 which came into effect in July 2012. In order to make a funding determination, the PPF will request the actuary to provide an estimate of the protected liabilities and assets of the scheme in place of a section 143 valuation.

The Statement sets out how the PPF will make its funding determination and also provide guidance to actuaries providing an estimate to the PPF in order that it can make its determination.

Statement setting out how the PPF will make a funding determination (version F2, February 2016)

The template certificate should be used by actuaries when submitting their estimate to the PPF.

Certificate of estimate for PPF funding determination purposes -  please provide an electronic Excel version of the completed certificate when submitting an estimate. If prompted, please SAVE the spreadsheet rather than opening.

 

 

Section 152

 

Section 152 valuations and funding assessments

Section 152 guidance is relevant for actuaries undertaking a valuation in accordance with section 152 of the Pensions Act 2004 for a reconsideration application under section 151 of the Pensions Act 2004.

The section 152 Statement is relevant for actuaries that are required to provide an estimate of the funding position for a reconsideration application under section 151 of the Pensions Act 2004. This is used by the PPF to make a funding assessment under section 152 of the Pensions Act 2004.

The guidance and Statement under s152 are included in a single document.

Guidance for actuaries conducting a valuation under section 152 and Statement setting out how the PPF will make a funding assessment under section 152 of the Pensions Act 2004 (version D3, April 2017)

Actuaries will be instructed by the PPF when calculations under section 152 of the Pensions Act 2004 are required for a reconsideration application.

A template certificate should be used by actuaries when submitting their estimate of the funding position to the PPF.

Certificate of estimate for PPF funding assessment purposes  - please provide an electronic Excel version of the completed certificate when submitting an estimate. If prompted, please SAVE the spreadsheet rather than opening.

Details on the reconsideration process are provided in the following document:

Guidance for overfunded schemes at the section 143 valuation stage

 

Section 156

 

Section 156 valuations

This guidance is relevant for actuaries undertaking a valuation of a closed scheme in accordance with section 156 of the Pensions Act 2004.

Guidance for actuaries conducting a valuation under section 156 of the Pensions Act 2004 (version C3, April 2017)


 

Section 158

 

Section 158 valuations

Due to the small number of schemes that are required to carry out s158 valuations the PPF has not issued formal guidance for actuaries undertaking a valuation of a scheme applying for re-entry to the PPF in accordance with section 158 of the Pensions Act 2004. Please contact your PPF actuarial contact if you have any questions on carrying out a section 158 valuation and for a copy of the formal section 158 certificate.

 

Section 179

 

Section 179 valuations


This section is relevant for actuaries undertaking a valuation to determine the level of a scheme’s funding position in accordance with section 179 of the Pensions Act 2004. The results of the valuation are combined with the results of the s179 valuations for all other schemes that are eligible for the PPF to assess the general level of scheme underfunding and used to set the levy quantum and scaling factor. The s179 results for an individual scheme are also used to calculate the PPF levy for that scheme.


The guidance for undertaking a s179 valuation is updated periodically. Version G7 should be used for all valuations with an effective date on or after 6 April 2017.

Guidance for undertaking the valuation in accordance with Section 179 of the Pensions Act 2004  (version G7, April 2017)


The guidance on assumptions to use when undertaking a s179 valuation is updated periodically. Version A8 should be used for all valuations with an effective date on or after 1 December 2016.

Guidance on assumptions to use when undertaking a valuation in accordance with Section 179 of the Pensions Act 2004 (version A8,  December 2016)

 

You can also view guidance that was valid for previous periods.


Certificate required under section 179 valuation
This certificate should form part of the scheme actuary’s s179 valuation report. The s179 certificate should be given to the scheme’s trustees, it should not be sent directly to the PPF. Information contained in the section 179 certificate should be submitted to the PPF as part of the annual scheme return via the Pension Regulator’s system Exchange. The PPF Board will ignore any s179 information submitted in error direct to the PPF and will not take it into account in levy calculations.

It is possible to update the s179 valuation pages of Exchange at anytime.

For further information on s179 valuations, please see the s179 valuation FAQs in our FAQ database.