Home > News > 2009 > August 2009 > Professional Pensions - Valuation assumption changes will benefit those on the PPF threshold
Professional Pensions - Valuation assumption changes will benefit those on the PPF threshold
Jenna Towler (13 August 2009)
Schemes with a younger membership and those with assets just above the Pension Protection Fund threshold will benefit from valuation assumption changes Barnett Waddingham says.
The consultant estimates that if the changes had been applied in time for this year's levy some schemes would have seen their levy bill drop by around 80%.
However, this would have been countered by the increase payable by other schemes.
The proposed new assumptions will come into force for valuations completed after October 31, with two main changes increase life expectancy assumptions to allow for recent longevity research and weakened financial assumptions following discussions with the bulk annuity market (PP, August 6). Partner Paul Jayson said: "Although the new assumptions would be expected to reduce a scheme's 'protected liabilities', the PPF has a fixed amount it needs to raise in levies each year and so these changes will only serve to reallocate, rather than reduce the levy.
"Whether a scheme gains or loses depends on the structure of the PPF's model. The bigger issue is the impact of the recession, which has meant several large schemes will now no longer be paying the levy.
This will increase the burden on all schemes that remain eligible to pay it."
Occupational Pensions Trusts said the changes should give more schemes a chance to maximise member benefits. Development director Ben Shaw said that the changes allow more scheme members to secure higher benefits than if their schemes fall into the PPF safety net. To visit Professional Pension's website please click
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