Trustees and employers aiming to beat the deadline of 31 March 2010 for submission of documentation relating to the certification of contingent assets (or the re-certifying of existing contingent asset agreements) must ensure compliance with the new version of the contingent asset guidance recently issued by the Pension Protection Fund (PPF).
The following deadlines apply: click here.
Contingent assets are used to reduce the risk of an employer insolvency event resulting in a claim on the PPF and so can reduce substantially a scheme’s risk-based levy bill. The revised PPF guidance includes changes to the contingent asset procedures originally proposed in the 2010/11 PPF levy consultation document. Key changes include:
- revised standard form documents which should be used for all new arrangements and which are available on the PPF’s website;
- organisations domiciled in Hong Kong may now be guarantors in relation to type A contingent assets (group company guarantees), the account bank/custodian in relation to some type B contingent assets (securities), and issuers of type C contingent assets (letters of credit and bank guarantees);
- evidence will be required to show that the corporate benefit to the guarantor, chargor or purchaser has been considered and established in respect of all new arrangements; and
- the interval between valuations of property under a ty[pe B(ii) arrangement is reduced from three years to 15 months. Any schemes that used such arrangements for the levy years 2007/08 and 2008/09 should factor this timescale into any re-certification to take account of any decrease in value of the charged assets.
View the revised PPF guidance.