LONDON 7th October 2014 – On 6th October the Pension Protection Fund (PPF) confirmed its final proposals for the calculation of levies for 2015/16 and beyond. These included a number of changes from the initial consultation document published in May, perhaps most notably the relaxation of restrictions on the treatment of asset-backed contributions (ABCs) in the levy calculation.
Ian Warman, pensions partner at KPMG, commented: “This is a welcome acknowledgement from the Pension Protection Fund that their initial proposals on ABCs were too restrictive. Rather than only allow levy credit for structures which are based on UK property, the PPF will now give recognition to a wider range of assets, based on an independent valuation of the underlying asset on insolvency. This allows structures which provide a clear reduction of risk to schemes to achieve appropriate credit in the levy calculation.”
The PPF also announced a number of changes to the new levy insolvency model, which is provided by Experian.
Ian explained: “The PPF has moved to address some of the obvious anomalies in the original version of the model, showing a welcome willingness to respond to industry feedback. It remains the case, however, that there will be winners and losers under the Experian model, and a significant number of schemes will still be facing levy increases in excess of £100,000. Trustees and sponsors must understand the changes to help them manage their future levies.”
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