Of interest to all schemes providing defined benefits is the Pension Protection Fund’s (PPF’s) confirmation of its finalised levy determination for the 2015/16 levy year, which starts on 1 April 2015.
The determination confirms the operation of the new PPF-specific model for assessing insolvency risk which has been developed with Experian.
In our October 2014 update, we reported in depth on the consultation published by the PPF on the new levy-scoring process and the proposed practical application of the new policy in calculating the risk-based and scheme-based levies. The PPF has made only minor technical amendments to the PPF-specific model in response to matters raised in the October consultation.
- altering the entry conditions for the large and complex scorecard so it will not capture businesses that file abbreviated accounts or whose only subsidiaries are dormant;
- where businesses employ a large number of part-time employees, allowing them to request that Experian use the company’s full-time equivalent accounts number to calculate employee-related variables; and
- excluding immaterial mortgages (where they have been appropriately certified) in assessing the age of the most recent mortgage/secured charge.
The immateriality test for the “mortgage age” variable will apply where the company, or wider corporate group, has an investment grade credit rating (defined in the Determination), or where the amount of the charge is less than 0.5 per cent of the total assets of the chargor. A template of the required Officer’s Certificate is included in the Determination.
The Determination confirms that the levy scaling factor and the scheme-based levy multiplier will be 0.65 and 0.000021 respectively. These factors were those published in October supporting the levy estimate of £635m, compared to £695m in 2014/15.
View the Determination.
As a reminder, the deadlines in relation to the PPF levy for information provision are set out below.
Click here to view table.