On 18 December 2014, the Pension Protection Fund (PPF) published its final Determination for the 2015/16 levy year. The 2015/16 Determination heralds the beginning of the second PPF Levy Triennium and significant changes to the PPF levy regime through the introduction of a PPF-specific model designed to provide both transparency and a greater degree of certainty to trustees and employers.
We reported the key changes to the PPF levy regime in October 2014, following publication of the draft Determination. The final Determination includes only a few minor changes which are intended to enhance the PPF-specific model. These include amending entry conditions for one of the scorecards for large and complex employers and reflecting the impact of part-time employees where the information is reported in business accounts.
Under the new levy regime there will be winners and losers and those trustees and employers who have yet to do so are strongly advised to check what their PPF levy is likely to be for the 2015/16 levy year. In particular, there are a number of key new certification requirements for:
- recognition of Asset-Backed Contributions (ABCs);
- excluding immaterial mortgages in the calculation of an employer’s insolvency score; and
- last-man standing schemes to confirm that legal advice has been taken in respect of the scheme’s status.
In order to be in a position to provide any relevant certification, trustees (and employers) may need to think ahead and build in time over the coming months to ensure that, where relevant, they are able to meet the PPF deadlines for certification (see below). For instance, certification of ABCs requires a valuation of the underlying asset on an insolvency basis and last-man standing schemes may need to engage their legal advisers to review and formally advise on the status of the scheme.
For those schemes putting in place new contingent assets or recertifying existing ones, trustees will be required to certify each contingent asset on the basis of a specific cash sum which the trustees believe the guarantor could provide in the event of insolvency; such trustees will need time to obtain and consider further information so that a specific sum may be certified.
There are a number of dates trustees and employers should be aware of. Some of the key dates are summarised below:
Click here to view table.
Similarly to previous levy years, the PPF has confirmed that it will begin to invoice schemes in the Autumn of the new levy year.