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FAQs: Pension Protection Levy 2008-09

General Questions

What has the Pension Protection Fund done to consult on the proposals for calculating the 2008/09 & 2009/10 pension protection levies?
We published the Consultation on the Future of the Pension Protection Levy in August 2007. This document contained policy proposals for the 2008/09 & 2009/10 pension protection levies as well as early thinking on 2010/11 and beyond. The consultation period ended on 3 October 2007.

We published a summary of responses to the consultation, along with final levy proposals, the levy estimate and an indicative scaling factor for 2008/09, at the end of November 2007.

When was the Determination setting out the rules for calculation of the 2008/09 pension protection levy be published?
The Board’s Determination under section 175(5) of the Pension’s Act for the 2008/09 levy year was published in draft in November 2007.

When will I be able to complete the annual Scheme Return which will provide the data for the 2008/09 & 2009/10 pension protection levy calculations?
The Pensions Regulator’s new scheme maintenance website, Exchange, will go live in December 2007. Schemes will receive their Scheme Return notifications in December 2007 or January 2008.  You’ll be able to complete Scheme Returns and s179 valuations online once this is launched.

For more information on completing your Scheme Return, please visit:

www.thepensionsregulator.gov.uk/onlineServices/exchange/index.aspx

or contact the Regulator on 0870 606 3636 or at: schemereturns@thepensionsregulator.gov.uk.

Please note that data for the levies will be taken from the information held by the Pensions Regulator on 31 March 2008 and no corrections to that data will be accepted for the 2008/09 or 2009/10 levy years.  It is for schemes to ensure that the information they supply is correct.

Will the PPF accept data corrections to the data provided via the scheme return or voluntary certificates after 31 March or 7 April, as in previous years? (added 7/5/08)
From 2008/09 we do not generally accept corrections or updates to data submitted via scheme maintenance, voluntary certificates, or in any other form by the relevant deadlines.

If your scheme’s circumstances change, you should update Exchange with any new information on an ongoing basis. This will save you time when it comes to submitting your next scheme return and help to ensure that all relevant fields are updated for future levy calculations. The information stored in Exchange at midnight on 31 March 2009 will be used in the 2010/11 levy calculation.

Under paragraph 12 of the determination, we may, at any time prior to the calculation or any recalculation of the levy in respect of a scheme, take such steps as we think fit to obtain further or amended information for the purposes of that calculation or recalculation.

If appropriate, our data cleaning team will contact you for this information. Any information made available to us through this exercise should also be entered into Exchange.

However, please be aware PPF is under no obligation to take such steps where information has not been provided to the Board on or before any applicable deadline prescribed in the determination, and will not do so merely because a scheme has been disadvantaged by the failure of those acting on its behalf to supply information at the proper time or in the proper manner.

Does my section 179 valuation have to be submitted to the Pensions Regulator this year?
Yes. Section 179 valuations should now be submitted to the Pensions Regulator via the annual Scheme Return, as above. Schemes are reminded that there is a statutory requirement for them to submit a first Section 179 valuation by 31 March 2008, or within 15 months of the effective valuation date.

If your deadline for submission of your section 179 valuation falls before you are able to submit your annual Scheme Return to the Pensions Regulator, you may still submit it to the Pension Protection Fund via schemeinfo@ppf.gsi.gov.uk.

Which voluntary certificates are available for completion for the 2008/09 levy year?
The certificates and their respective submission deadlines are:

• Contingent Asset Certificates – midnight on 31 March 2008 for 2008/09
• Actuarial Certificate of Deficit-Reduction Contributions – midnight on 7 April 2008 for 2008/09
• Block transfer certificates – midnight on 7 April 2008 for 2008/09

These certificates should still be submitted to the PPF.

The information required to complete the insolvency risk calculation for multi employer schemes was previously collected using the two-part Declaration of Scheme Structure and Participating Employers Form. This information is now collected via the Pensions Regulator’s Scheme Return.

Which schemes are liable to be charged a pension protection levy?
All eligible schemes, as defined in section 126 of the Pensions Act 2004 and the Pension Protection Fund (Entry Rules) Regulations 2005, must pay the scheme based element of the pension protection levy.

All eligible schemes, except those whose section 179 valuation and any deficit-reduction contributions certificates showed them (after roll forward) to be more than 140 per cent funded, and schemes in a PPF assessment period where a scheme failure notice has been filed, are liable to be charged the risk based element of the pension protection levy in 2008/09.

Do schemes in assessment have to pay the levy? (added 20/12/2007)
Schemes in assessment will be charged a nil pension protection levy for 2008/09 provided a failure notice under s122(2)(a) of the Pensions Act 2004 has been filed by a scheme on or before 31 March 2008.

If no such notice is received, the scheme will be charged the full levy.  In addition, if the scheme or section has not filed its first s179 valuation by the same date, the levy will be calculated applying a disincentive as described here.

It is therefore important that, if the Insolvency Practitioner is satisfied that there will be no rescue of the scheme or section and the conditions for a failure notice apply, the failure notice is sent to us on or before 31 March. The relevant form is available here. If the failure notice is received, we will not be requiring your scheme to complete a s179 valuation.

I think that my scheme has a crown guarantee, am I still liable to pay the pension protection levy?
Before we can take a decision in respect of the eligibility of such a scheme, we will need to see documentary evidence of the guarantee from the relevant public authority or of other arrangements made by a relevant public authority to secure that the assets of the scheme are sufficient to meet its liabilities.  

The documents that are required to prove a suitable guarantee or arrangement is in place are as follows:

• a copy of the relevant legislation in which the guarantee or arrangement is set out, or
• written evidence, preferably a document signed by a Government Minister, setting out the terms of the guarantee or arrangement.

What is the Pension Protection Fund’s definition of a sectionalised/segregated scheme?
Pension Protection Fund legislation refers to segregated schemes which are defined as follows by regulation 1(2) of the Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005:

A “segregated scheme” means a multi-employer scheme which is divided into two or more sections where

(a) any contributions payable to the scheme by an employer in relation to the scheme or by a member are allocated to that employer’s or that member’s section, and

(b) a specified proportion of the assets of the scheme is attributable to each section of the scheme and cannot be used for the purposes of any other section.

As such schemes are commonly referred to as sectionalised schemes; both terms are used in these FAQs to ensure all relevant schemes are aware that these FAQs apply to them.

How does the Pension Protection Fund treat sectionalised/segregated schemes for levy purposes?
Each section of a sectionalised/segregated scheme is treated as if it is an individual scheme. For each section, the Pension Protection Fund will request separate data and issue a separate invoice.

How much does the PPF estimate it will collect for the 2008/09 levy year and how much of that estimate will be made up of the risk based levy?
The pension protection levy estimate for the financial year 2008/09 is £675m, to be made up of a total risk based element of £540m and a total scheme based element of £135m.

How does the formula for the 2008/09 risk based levy scaling factor operate?
The levy scaling factor scales up a scheme’s short term risk (1 year) to its long term risk (5 year) as calculated by our Long Term Risk Model.  This helps ensure that the total amount raised by the risk based levy closely matches our levy estimate.

For 2008/09, the risk based levy scaling factor is 3.77.

What is the scheme based multiplier for 2008/09?
The 2008/09 scheme based multiplier is 0.000165 per cent. The scheme based levy will be calculated as 0.000165 x scheme liabilities on a section 179 basis as at 31 October 2007.  

At what level will the risk based levy be capped for 2008/09?
For the 2008/09 levy year the risk based levy will be capped at 1 per cent of liabilities on a section 179 basis as at 31 October 2007. Consistent with previous years, the levy cap will protect around five per cent of the weakest schemes.

Will the new s179 assumptions affect my 2008/09 levy?
The new assumptions will not affect the 2008/09 levy, which will be based upon the PPF’s estimate of your section 179 position at 31 October 2007.  

For the 2009/10 levy which section 179 valuation will be taken into account?
The 2009/10 levy will take into account the most recent section 179 valuation submitted by midnight on 31 March 2008, as announced in November 2007.  

Will the new section 179 valuation assumptions affect my 2009/10 levy?
The 2009/10 levy will be based upon the PPF’s estimate of your section 179 position at 31 March 2008 using the valuation information submitted by that date. The intention is that the new valuation assumptions will be used in that estimate.

The new assumptions will not change the overall levy quantum that the PPF intends to collect for 2009/10. But the proportions in which this levy is allocated between different schemes will be affected by the new assumptions.  

Levy Structure & Scaling Factor

What is the pension protection levy and how is it calculated?
The 2008/09 pension protection levy is made up of two parts: the scheme based levy (20 per cent of the total) and the risk based levy (80 per cent of the total). The PPF sets a total levy estimate every year, based on the calculations of its Long Term Risk Model (LTRM).

The risk based levy is calculated by multiplying a scheme’s underfunding risk by its insolvency risk to determine the scheme’s risk exposure. This is multiplied by 0.8 (because the levy is 80 per cent risk-based), and by a levy scaling factor (LSF), which matches schemes’ individual levy amounts, based on short-term risk, to the total levy estimate, based on long-term risk, ensuring that the total amount collected is close to the estimate.

The formula for the risk based levy is:

RBL = U x P x 0.8 x LSF

RBL = risk based levy
U = underfunding risk
P = assumed insolvency probability
0.8 = percentage of the levy that is risk-based
LSF = levy scaling factor

The scheme based levy is paid by all schemes on the basis of their Pension Protection Fund liabilities, to recognise that all schemes pose some risk to the PPF.

The formula for the scheme based levy is:

SBL = L x M

SBL = scheme based levy
L = the scheme’s Pension Protection Fund liabilities, and
M = scheme based levy multiplier

Why is there a scheme based levy multiplier?
The scheme based levy multiplier makes sure that the scheme based levy collected by the PPF makes up 20 per cent of the total pension protection levy estimate. For 2008/09, the scheme based levy multiplier is 0.000165

Why is there a levy scaling factor?
The levy scaling factor matches the amount collected from individual schemes to the total levy estimate. This is necessary because the total short-term risk exposure of eligible schemes does not match the levy estimate. This total is based on the calculations of our Long Term Risk Model. The levy scaling factor for 2008/09 is 3.77

What goes into the levy scaling factor calculation?
Six key data elements go into the levy scaling factor calculation:

1.Scheme funding information
2.Sponsoring employer information and related D&B failure scores and probabilities of insolvency
3.Type A contingent asset guarantor information
4.Information on scheme structure, status and type
5.Deficit reduction contributions
6.Contingent assets.

How does the final levy scaling factor of 3.77 reconcile with the indicative levy scaling factor of 1.6? (added 11/6/2008)
The change in the levy scaling factor (LSF) between its indicative value in November 2007 and the final amount in March 2008 can be attributed to changes in various risk factors, as well as sampling considerations. The table below reconciles the change in the LSF to these various elements.

How was the indicative levy scaling factor calculated in November 2007? (added 11/6/2008)
The indicative levy scaling factor was calculated using the best available scheme data at the time (end October 2007). The indicative levy scaling factor of 1.6 included a margin to accommodate for potential changes in scheme risks between November 2007 and March 2008. This margin was based on a series of stress tests conducted on the underlying scheme data (step 2 in above table).

Has your estimate of the number of defined benefit pension schemes in the UK changed since November 2007? (added 11/6/2008)
Yes. The universe of DB pension schemes in the UK is dynamic and changing. Between November 2007 and March 2008 revisions were made to the number of eligible DB schemes based on developments such as buyouts, mergers and break-ups to existing schemes, as well as the discovery of newly eligible and ineligible schemes. Schemes that had commenced an assessment period by 31 March 2008 were also removed, as from 2008/09 levy year they are no longer required to pay the levy.

The PPF estimates that by March 2008, there were 323 fewer schemes across the whole universe compared to November 2007. And according to the latest estimate there are a higher proportion of schemes in the smallest membership category (less than 100 members) than we had previously believed. These revisions affect the grossing up undertaken in calculating the levy scaling factor (as per Appendix 5 to the 2008-09 Determination), and had the effect of increasing the levy scaling factor by 12 per cent (step 4 in above table).

Were there any changes in scheme underfunding caused by the submission of new section 179 information after 31 October 2007? (added 11/6/2008)
The submission of new section 179 information resulted in schemes being better funded both in aggregate and on average compared to the funding data used for the indicative scaling factor calculations. The difference in funding data is predominantly explained by changes in valuation source. Indeed, of the 4,875 schemes which are common to the samples used in November 2007 and in March 2008, just over half had only provided an MFR valuation at the point of the indicative calculations but had submitted a section 179 valuation by 31 March 2008. In addition, some 7% of schemes had a different section 179 valuation date in March 2008 than that used in the indicative calculations.

These changes along with additional deficit reduction contributions (it is necessary to include deficit reduction contributions here as these affect funding estimates) actually reduced the levy scaling factor by approximately three per cent. This reduction is due to the distribution of the changes in funding. Indeed, fewer schemes were subject to the reduced risk based levy or exempt from the risk based levy in March 2008 than in November 2007. This means a higher proportion of schemes pay the full risk based levy in March 2008, and scaling factor falls as a result (step 5 in above table).

Was there any change in D&B Scores between the information available in November 2007 and May 2008? (added 11/6/2008)
Yes. The indicative levy scaling factor published in November 2007 was based on D&B failure scores as at 8 October 2007. This was the first set of employer failure scores provided to the PPF under the D&B revised methodology. Changes in D&B scores between 8 October 2007 and 31 March 2008 had the effect of increasing the scaling factor by approximately 51 per cent (step 6 in above table). An investigation of some of the largest improvements in failure scores for large schemes between October 2007 and March 2008 by D&B at the request of the PPF found that many of the changes stemmed from employer appeals and action by companies (in providing new data or data changing) in advance of the 31 March 2008 measurement date for insolvency risk.

Further, paragraph 49(d) of the 2008-09 Determination reflects the Board’s decision to assume for the purposes of the scaling factor that the insolvency probability for a scheme be equal to the lower of the insolvency probability calculated in accordance with the 2008-09 Schedule (applied to the information available to the Board at the point of calculation) and the insolvency probability used for the actual calculation of the risk based levy for that scheme for the 2007/08 levy year. This ‘underpin’, intended to estimate the effect of further insolvency probability appeals, had the effect of increasing the levy scaling factor by a further 34 per cent (step 7 in above table).

How have new deficit reduction contributions and new contingent asset arrangements submitted since November 2007 affected the final levy scaling factor? (added 11/6/2008)
As mentioned above, it is necessary to include deficit reduction contributions in estimating the effect that changes in underfunding have had on the levy scaling factor. Schemes registered approximately £5 billion worth of new Deficit Reduction Contributions with the PPF by 7 April 2008.

With regard to contingent assets, it is estimated that the impact of new contingent assets had the effect of increasing the levy scaling factor by 8.5 per cent (step 8 in above table).

How do you deal with schemes for which you do not hold complete and clean data? (added 11/6/2008)
Where we do not hold complete and clean data for a scheme, the Determination prescribes that we use an average levy in the levy scaling factor calculation.  The average levy assumed for a particular scheme is based on the average levy for schemes of a similar size (grouped by membership numbers) for which we hold sufficient data.  The indicative calculations were based on scheme return data submitted by 31 March 2007, whereas the final calculation was based on data submitted by 31 March 2008.  Steps 3 and 9 in the above table detail the effect of moving from scheme data to an average value or vice versa between the indicative and final calculations.

What about introducing an investment risk factor into the risk based levy?
We consulted for 8 weeks from the beginning of December 2006 on the potential inclusion of investment risk as a risk factor in future levy years. The Board decided that the redistribution effect of the levy as a result of its introduction would be disproportionate to the cost incurred by schemes.

Contingent Assets

I put in place a contingent asset arrangement for 2007/08; will I have to re-certify this arrangement for inclusion in the 2008/09 levy calculation?

Yes. If credit is to be given for a contingent asset arrangement in the risk based levy calculation, that arrangement should have been re-certified by Midnight on 31 March 2008.  Re-certification documentation will be sent to schemes in early 2008.  If scheme trustees believe they should have been issued a re-certification document and have not received one, they should contact the Pension Protection Fund at information@ppf.gsi.gov.uk

Contingent assets for the 2009/10 levy must be certified by on 31 March 2009.

I have put a contingent asset in place, can I now reduce it?
Pensions liabilities are long-term in nature. Accordingly, it is important that contingent assets must provide a consistent level of protection over time, to ensure that the reduction in risk based levy offered to schemes with contingent assets in place is fair. The standard form legal documents published by the PPF are designed to provide a consistent level of protection to scheme trustees.

However, we recognise that trustees may be willing to allow contingent asset cover to be reduced over time, in particular where scheme funding has improved. Each of the standard form legal documents contains provisions whereby the relevant contingent asset may be reduced or replaced on an annual basis, depending on the level of scheme funding as set out in a suitable valuation, any documented special contributions, and any other contingent assets that are put into place.

If a contingent asset is removed or replaced during the levy year, the trustees/managers are obliged to notify us.  We may then reassess the risk based levy in respect of that scheme.  If the reduction or removal is, in broad terms, consistent with the principles embodied in the standard form document for that contingent asset, then we will continue to give credit for that contingent asset but may increase the risk based levy to reflect the reduced contingent asset cover.  If the reduction or removal is inconsistent with the principles set out in the documentation, then the risk based levy for the year will be recalculated as though the contingent asset had never been in place, and no further credit will be given for that contingent asset.

We will not recognise a contingent asset in future years if its value to the scheme has been reduced in a way that is inconsistent with the principles set out in the documentation, until the scheme has reached a level of funding that would have rendered the reduction permissible.  

Please refer to the Contingent Asset Guidance for full details.

I have put in place/am considering putting in place a parental guarantee for my scheme. The parent company is based in a foreign country, how can I find out their insolvency risk?
There are two ways you can find this information:

1. Contact D&B’s helpline for Pension Protection Fund related queries on 0870 850 6209 to obtain a failure score for the overseas company, or

2. contact the Pension Protection Fund Stakeholder Support Team on 0845 600 2541 providing details of the country of domicile of the overseas guarantor and the corresponding failure score provided by D&B. The Pension Protection Fund will provide the company with a probability of insolvency for that failure score.

Do contingent assets (particularly Type B) fall foul of the statutory restrictions on employer-related investments?
Ultimately this is a question of statutory interpretation. Our interpretation is that contingent assets of the types we will recognise for levy purposes do not constitute an investment of scheme assets/resources of the scheme by the trustees, and therefore the restrictions are not relevant.

Must letters of credit and bank guarantee contingent assets (Type C (i) & C (ii)), be denominated in sterling?
Yes.  The standard form Type C documentation refers to pounds sterling only and the associated Type C certificates similarly require the amount guaranteed to be in sterling.

The proposed guarantor for a type A arrangement is  an associate of an employer of the scheme but is also an employer of the scheme itself.  Can it be the guarantor in a type A arrangement in these circumstances? (added 6/3/08)
Yes.  Paragraph 6.2.1 of the contingent asset guidance summarises  the Board's requirements in respect of a guarantor. One of the Board's requirements is that the guarantor must be an “associate” (within the meaning set out in section 435 of the Insolvency Act 1986) of at least one of the participating employers in the scheme. One employer of the scheme may provide a guarantee in respect of other employers of the scheme provided that it is an associate of at least one of the other participating employers (and will then have to guarantee the obligations of all employers which are associates of the guarantor).

Underfunding

Is it still the case that schemes funded above 125 per cent of section 179 liabilities will pay no risk based levy?
The funding threshold over which schemes pay no risk based levy has moved in 2008/09 to 140 per cent.  As scheme funding has generally improved over this period, many schemes that did not pay a risk based levy in 2007/08 will not pay one in 2008/09 either

Which version of the s179 guidance should be used for section 179 valuations signed/submitted after April 2007?
Version G4 of the guidance is effective for valuations with an effective date on or after 6 April 2007 or for valuations with an effective date prior to 6 April 2007 to be signed on or after 1 October 2007.

What happens if I miss the 31 March 2008/09 deadline for submission of an initial section 179 valuation?
Where the mandatory s179 valuation has not been submitted by 31 March 2008, we will calculate the levy as follows:

• the estimated section 179 valuation as at 31/10/06 used in your 2007/08 levy invoice calculation that was obtained by converting your MFR valuation (i.e. the first step described above) will be treated as if it had been submitted to us in the usual way
• this will be rolled forward to the calculation date (31/10/07 for 2008/09 and 31/03/2008 for 2009/10) in accordance with our standard formulae, but the value of the scheme’s assets will be reduced by 5 per cent for each year between the effective date of the MFR and the calculation date.

In consultation with the Government Actuary’s Department, we developed a methodology for adapting MFR valuations to estimate liabilities on a section 179 basis. This methodology had three key steps:

• transform liabilities from an MFR valuation basis to a s179 valuation basis
• roll forward the value of assets and liabilities to a common date, and
• allow for the Pension Protection Fund levels of benefit in the rolled forward liabilities.

I understand that ‘Appendix 1 to the draft 2008/2009 determination states to revalue the value of assets held in property in line with the ‘FTSE UK All Property TRI’:
(i)Should the total return figure used be based on net asset value or gross asset value?
(ii)As the index only started on 22 June 2006, how should these assets be revalued prior to that date?  (updated 16/1/2008)

(i) The gross asset value figure should be used.

(ii) For relevant accounting dates prior to 22 June 2006 (the base date of the index), the assets held in property should be revalued in line with the FTSE All-Share TRI between the relevant accounting date and 22 June 2006. The adjusted value should then be revalued in line with the FTSE UK All Property TRI from 22 June 2006 to the output date.

When the section 179 valuation guidance changed from G3 to G4, the need to value certain benefits (such as death before retirement lump sum benefits) was lost.  Does this mean that we can also exclude these benefits (such as death before retirement lump sum benefits) from the cost of accrual (item b) in the Actuarial Certificate of Deficit Reduction Contributions (“ACDRC”) calculation?(added 22/1/08)
The ACDRC guidance (section 2.6) refers to the cost of accrual of scheme benefits (item b), subject to the adjustments described in section 4.1 of the Section 179 guidance.  However, it is the intention that other aspects of section 4 of the Section 179 guidance are also taken into account when calculating the cost of accrual for ACDRC purposes.  In particular, details of the death benefits provided in section 4.8 should be taken into account for this calculation, such as the inclusion of the 50% spouse’s pension (section 4.8.1) and the choice to exclude pre-retirement lump sum death benefits (section 4.8.2).

I am certifying deficit reduction contributions between 31 March and 7 April 2008. Which version of the s179 assumptions should I use?
You should continue to use the previous section 179 assumptions (version A3) in calculating the amount to be certified, as set out in the deficit-reduction contributions guidance.

Insolvency Risk

See the D&B methodology FAQs for the latest information.

Multi-employer schemes

How will you measure the insolvency risk of multi-employer schemes for the 2008/09 levy year?

All the information that was previously gathered on the two-part Declaration of Scheme Structure and Participating Employer forms will be now be included with the Pensions Regulator’s annual Scheme Return.

We will calculate the weighted average of the probabilities of insolvency of all the sponsoring employers. The weighted average will then be multiplied by a factor to ensure the correct hierarchy of risk is maintained between the various types of multi-employer schemes.

This factor will be:

• 1 for those schemes with an option or requirement to segregate;
• 0.9 for a last man standing associated scheme;
• the number of members of the employer with the most members divided by the total number of members for the whole scheme for a last man standing, non-associated scheme.

I am a last-man-standing scheme, how do I know if I am associated or non-associated?
Treatment as a last-man-standing non-associated scheme is at the discretion of the Board of the Pension Protection Fund based on evidence supplied by the scheme and/or otherwise available to the Board. Evidence could include relevant parts of the Trust Deed and Rules, scheme booklets, and any booklets for employers. We reserve the right to contact schemes to request further information.

When completing the annual Scheme Return issued by the Pensions Regulator in respect of a multi-employer scheme, how should I apportion orphan members, and members who cannot be assigned, to the remaining participating employers?

Orphan members and members who cannot be assigned to the current participating employers, for whatever reason, should be allocated between the remaining participating employers of the scheme in proportion to the number of non-orphan scheme members belonging to each participating employer.

For example, assume a scheme has 120 members in total and 60 of these cannot be apportioned. There are 3 remaining participating employers with the following number of members:

Employer A - 10 members
Employer B - 20 members
Employer C - 30 members

The remaining 60 members should then be allocated in the same proportions i.e. 10 members to Employer A, 20 members to Employer B and 30 members to Employer C giving the following totals to be entered on the Participating Employers form:

Employer A - 20 members
Employer B - 40 members
Employer C - 60 members

Block Transfers

How can I ensure that deficit reductions made to a scheme that has undergone a block transfer are appropriately reflected?
There are two options.  Either by carrying out the assessment of assets and liabilities on a s179 basis at an effective date after the deficit contribution, or if the assessment is carried out at an earlier date, then have the actuary fill in an actuarial certificate for deficit reduction contributions, reflecting only those contributions that occurred after the effective date of the assessment reported in the block transfer certificate. It is acceptable for the valuation referred to in the actuarial certificates to be the block transfer assessment, rather than a formal valuation.

We are only obliged to take into account block transfers and deficit reductions certified to us by 7 April 2008.  Please note the deadline for block transfers is earlier than for previous years.  Please see below regarding block transfers close to the deadline date

What can I do if my scheme is completing a transfer/merger in March 2008 and will not be able to complete the block transfer certificate?
The Determination gives us discretion to accept later block transfer information in certain circumstances.  We propose to exercise that discretion where the certificate is supplied within 3 months of the legally effective date of the transfer and the scheme notifies us of their situation (to schemeinfo@ppf.gsi.gov.uk ) on or before the 7 April deadline

What happens if, following a block transfer, one of the schemes does not complete its part of the block transfer certificate?
To be taken into account for levy purposes, a block transfer certificate must be completed by both parties.   The PPF however retains the discretion to seek further information from any schemes where it believes a scheme’s failure to supply information may lead to an unfairly low levy.

I submitted a block transfer certificate that was taken into account for the scheme’s 2007/08 levy.  I have not submitted an updated valuation for the 2008/09 levy year.  Will the certificate I submitted for the 2007/08 levy be taken into account for the 2008/09 levy?
No, for the 2008/09 levy we will only accept block transfer certificates completed in line with our 2008/09 guidelines as published on our website.

Since the effective date of the most recent valuation submitted to the PPF, the scheme has participated in a number of transfers.  In aggregate the transfers exceed the lesser of £1.5M and 5 per cent of the value of scheme assets, although no single transfer is large enough to be classed as material for the purposes of submitting a block transfer certificate.  How can I ensure that the transfers are appropriately reflected in the 2008/09 levy?
For the 2008/09 levy year, a block transfer certificate may only be submitted in respect of a material transfer.  Where no such transfer has taken place, the only option would be to submit the result of a formal section 179 valuation carried out after the transfers have taken place.  The deadline for submission of a section 179 valuation certificate to be taken into account for the 2008/09 levy year is midnight on 31 March 2008.

When filling in a block transfer certificate, what information do I enter in the section entitled ‘Valuation details’?
You should enter the liability and asset information of the relevant scheme AFTER the transfer has taken place. For part B of the certificate, you should reflect the funding position of the entire scheme after the transfer has been made (i.e. you should not just include details of the transferring assets and liabilities).

As noted on the certificates, the valuation should be carried out in the same way as for a normal section 179 valuation, and in particular should comply with the Pension Protection Fund (Valuation) Regulations 2005 and with guidance issued by the Pension Protection Fund. The three exceptions are that you do not require audited accounts for a block transfer certificate, that the physical transfer of the assets need not have been completed, and that valuations with an effective date of 31 March 2008 should use the s179 assumptions version A3.

Where the asset transfer had not been physically completed by the effective date of the valuation, as provided on the block transfer certificate, then the value to be applied to the transferring assets should be calculated as the market value that would have existed at the effective date of the valuation i.e. including any adjustments as specified in the sale and purchase agreement, or otherwise incorporating market returns to that date.

For the avoidance of doubt the Total asset and Total protected liability figures included in the valuation shown on the block transfer certificate should include the transferring assets and liabilities if the scheme submitting the certificate is the counterparty receiving the transfer and exclude the transferring assets and liabilities if the scheme submitting the certificate is counterparty paying the transfer

For a block transfer certificate, what effective date should I use in the section entitled ‘Valuation Details’?
The effective date needs to fall on or after the date of transfer. For these purposes the date of transfer is the date that the transfer is legally effective. Please note that the requirement set out in regulation 7(1) of the Pension Protection Fund (Valuation) Regulations 2005 for the trustees to have “received the assets of the full amount” by the effective date does not apply.  The same effective date must be used to assess the assets and liabilities, but the effective date on part A of the certificate need not be the same as that on part B of the certificate.

If I am submitting a block transfer certificate with a valuation date of 31 March 2008 which version of the s179 assumptions should I use? (added 2/4/2008)
If you are submitting the block transfer certificate for the purposes of the 2008/09 levy then you should use version A3 of the s179 assumptions.  Note that if you subsequently wish to submit a formal section 179 valuation at the same valuation date (for example when audited accounts become available) you will need to adjust the figures to be based on version A4 of the valuation assumptions.

If I submit a block transfer certificate with a valuation date of 31 March 2008 using version A3 of the s179 assumptions, when I come to re-certify next year will I need to re-submit the results using version A4? (added 2/4/2008)
This is something we will consider in due course.  However, you may be able to remove this area of uncertainty by choosing a valuation date for your block transfer certificate that is on or before 30 March 2008.