Schemes unhappy with their levy assessment may refer the matter to the PPF Ombudsman. The Ombudsman’s role on appeal is to look at the decision making process, not the substance of the decision, and in most cases the Ombudsman has upheld the levy on the basis that the PPF has complied with statutory requirements and its own published procedures. Recently, in a challenge by the trustees of the Michelin Pension Scheme, the PPF Ombudsman has found that a mistake was made in the levy calculation for 2008/2009 and has remitted the matter to the PPF for re-calculation. This was on the basis that the information provided by the Scheme in March 2008 in relation to orphan liabilities was technically incorrect and the PPF should at least have considered taking into account correct information which was submitted later.
And in other news, the PPF has published a policy statement announcing details of its new levy framework from 2012/13.
The full reasoning of the PPF Ombudsman in Michelin can be found here
Levy framework 2012/13 – key features
Fixing the levy rules for three years at a time. The parameters will be revised within the three years only if certain specified events occur.
Using smoothed asset and liability values for assessing scheme funding levels so that short-term volatility in financial markets is not reflected in the measure of underfunding risk. The PPF will use five-year daily averages of financial indices and yields to produce smoothed asset and liability values – schemes will not have to provide any additional information.
Reflecting investment risk in the levy calculation for the first time
Using a system of 10 insolvency rating bands and basing insolvency risk on the average Failure Score over 12 months.
A draft Determination for 2012/13 will be published for consultation alongside the levy estimate in the autumn.