The Pension Protection Fund (PPF) has released a consultation regarding proposals for the next three levy years.
"We recommend that schemes investigate the effect of these changes as soon as possible, as, in some cases, the impact will be significant."
The main proposal is a change in the insolvency risk model used for PPF levy purposes. The new model, which will replace D&B’s commercial model, has been developed specifically for sponsors of defined benefit pension schemes. Whilst the new model will only come into effect from 31 October 2014 onwards, many companies are likely to see a substantial change in their insolvency risk rating (and hence their PPF levies).
The PPF has also proposed sweeping changes to the ways in which Asset Backed Contributions (ABC) and Type A contingent assets are treated for PPF levy purposes, as well as amendments to the current discount for ‘Last Man Standing’ schemes.
We recommend that schemes investigate the effect of these changes as soon as possible, as, in some cases, the impact will be significant.
We can offer an in-depth analysis of companies’ ratings under the new insolvency risk model (including a comparison against the ratings under the previous D&B model), and the effect that this is likely to have on schemes’ levies. We can also illustrate the potential impact of the other proposed changes, i.e. ABCs, contingent assets, etc.