The Pension Protection Fund (PPF) has today (Thursday) opened a short consultation relating to contingent assets in the PPF levy. This will be of particular interest to schemes and employers that are considering putting a contingent asset in place, those who currently have one in place, and those who advise on them.
In March 2017, the PPF issued the first consultation on its approach to calculating the levy over the next three year period (2018/19 to 2020/21). We highlighted that we had become aware of an interpretation of the wording in some of the standard form contingent asset agreements that might be regarded as limiting the obligations in those agreements.
As indicated in the September consultation document for 2018/19, after reviewing the wider policy underlying these agreements and in light of responses from stakeholders, the PPF has decided to consult further before finalising its approach. The PPF is now seeking views on proposals to update the wording to provide greater clarity both in respect of the identified interpretation question, and also in respect of how the caps on guarantor/chargor obligations in the standard forms should operate in future. The intention is that the revised documentation will then come into use from early in January.
The PPF expects new agreements entered into after that date to be on the new form, but existing agreements will only need to move to the new basis from March 2019, in order for them to be taken into account in the levy from 2019/20 onwards.
The consultation document can be found here and the consultation runs until 21 November.
The Pension Protection Fund:
The Pension Protection Fund protects millions of people throughout the United Kingdom who belong to defined benefit pension schemes. If their employers become insolvent and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions. Tens of thousands of people now receive compensation from the PPF and hundreds of thousands more will do so in the future. The PPF is a public corporation, set up by the Pensions Act 2004, and is run by an independent Board.
For further press information contact:
PPF Press Office
020 7566 9775