The Pension Protection Fund has today published updated standard form contingent asset agreements along with revised guidance. The final rules for the PPF Levy for 2018/19 were published on 19 December 2017 and explained that the PPF would publish updated standard form contingent asset agreements (used for group-company guarantees, securities over certain assets, or bank guarantees) in mid-January 2018.
The revised agreements will ensure that they continue to be effective in reducing the risks to pension schemes of employer insolvency and the levy credit that is offered is appropriate.
The approach being taken by the PPF was consulted on in March 2017 and October 2017.
These are the fifth version of standard forms that the PPF has published since their introduction in 2006. The new forms need to be used for any new arrangements executed on or after 18 January 2018. Arrangements entered into before 18 January can be certified or recertified for 2018/19 without moving to the new forms. Some schemes with existing contingent assets will need to move existing agreements to the new forms if they are to be recognised in the levy from 2019/20 onwards.
As set out in the December policy statement if trustees are certifying/recertifying a Type A contingent asset for 2018/19 and the levy reduction as a result will be £100,000 or more they must first obtain an appropriate report on the strength of the guarantor. This will affect around one in five guarantees. The requirements where there is more than one guarantor and where the guarantor is also a scheme employer have also been made easier for guarantors to undertake; in particular, schemes with multiple guarantors may now certify the realisable recovery in aggregate, using a new certificate for each guarantor, rather than certifying a figure that each guarantor must be able to meet.
For more detailed information on contingent assets see the published guidance.
Notes to Editors
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 go bust, 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