Following a consultation, the PPF has published a policy statement confirming how insolvency risk for the 2011/12 levy will be measured. The way in which insolvency risk is calculated has changed and employers are urged to familiarise themselves with the details and take any necessary action before the failure score measurement date of 31 March 2010. The deadline for providing information to D&B to be taken into account is 5pm on 30 March 2010.

The policy statement confirms that for the 2011/12 levy year, the PPF will introduce a new probability of insolvency table. The PPF claims that, in conjunction with D&B’s new failure risk methodology, this will make the prediction of company insolvencies 15% more accurate.

A further change is the disregarding of type B contingent assets (security over an asset of the employer) when setting failure scores. During the consultation, concern had been raised over the negative effect that such a contingent asset could have on the score of the sponsoring employer as D&B would consider this along with any other charges as weakening the security of the sponsoring employer. The PPF has agreed that this contradictory effect is undesirable, so D&B will exclude any PPF-compliant contingent assets when considering the list of charges against a company.

A new attribute called “Nationwide” will be introduced for businesses with three or more branches in different UK locations. This will mean the employer is assessed as a national rather than a regional employer. D&B is satisfied that employers based in three or more locations have a lower statistical risk of failing over the course of the following 12 months than those in one or two locations. A “Nationwide” category will allow such sponsoring employers’ failure scores to be adjusted to reflect this decreased risk.

Employers should check their classification as soon as possible, as the latest date for submitting supporting evidence for a change of category is 30 March 2010.

View the PPF policy document. (pdf 390.63KB)