Of interest to all DB schemes is the Pension Protection Fund (PPF’s) updated valuation guidance for schemes undertaking valuations under sections 143 and 156 of the Pensions Act 2004. The updated guidance reflects the new definition of money purchase benefits that came into force on 24 July 2014 under section 29 of the Pensions Act 2011.
The guidance applies in respect of:
- Section 143 valuations – which are carried out within the assessment period to determine whether a scheme has sufficient funds to pay at least PPF levels of compensation. This is part of the process for determining if the PPF should assume responsibility for a scheme. The valuation is usually carried out by the scheme actuary upon the instruction of the PPF; and
- Section 156 valuations – which are valuations of a closed scheme. A closed scheme for these purposes is one which was fully funded when valued under section 143 during the assessment period and which, accordingly, was not assumed by the PPF; has a binding scheme failure notice; has been unable to obtain a full buyout quotation; and has applied to the PPF to continue as a closed scheme. Such schemes must be valued periodically.