New PPF insolvency risk model delayed
The Pension Protection Fund (PPF) has been forced to delay consulting on the new model for calculating insolvency risk it promised back in July 2013 when it announced that Experian would be replacing Dun & Bradstreet as its insolvency risk provider (see Pensions Bulletin 2013/32).
At the time, the PPF said that although it would not use Experian insolvency scores until the 2015/16 levy year it would, in the meantime, work with Experian and an industry steering group to develop a new model for calculating insolvency risk.
Unfortunately, development work has taken longer than anticipated and so levy payers will not be able to see their new scores in early 2014 as the PPF had originally intended.
The PPF wants to make sure that any new model consulted upon is robust and fit for purpose, so consultation with all interested parties will only take place once it is ready to set out the various options.
The PPF has also published a factsheet explaining why it sometimes enters into restructuring or rescue deals and outlining the principles it applies when doing so.
Comment
Although the new insolvency scoring system with Experian is not due to go live until the 2015/16 levy year, it is likely to influence 2015/16 levies from as early as April 2014. This unfortunate delay in giving access to the new proposed insolvency risk model is therefore likely to be of concern to those seeking to manage their PPF levy failure scores.
Pensions public bodies given clean bill of health
Pensions minister Steve Webb has confirmed that following a triennial review carried out in line with the Cabinet Office’s key principles for reviews of non-departmental public bodies (NDPBs) (see Pensions Bulletin 2013/28), the Government is satisfied that the functions performed by the Pensions Regulator, the Pensions Advisory Service, the Pensions Ombudsman and the Pension Protection Fund Ombudsman are necessary and that the current bodies remain best placed to deliver those functions.
However, the review also makes the point that ongoing pension reforms such as auto-enrolment and savings provision through schemes such as NEST and new proposals such as those for defined ambition schemes mean that pension provision is currently in a transitional period with changes likely to have implications for these bodies. It therefore concludes that a more comprehensive review of the regulatory landscape is likely to be required during the next parliament.
PPF levy ceiling and compensation cap updated
The Department for Work and Pensions has made an Order confirming the Pension Protection Fund (PPF) levy ceiling and compensation cap from 1 April 2014.
The Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling and Compensation Cap) Order 2014 (SI 2014/10) provides that:
- The ceiling for the 2014/15 pension protection levy will be £941,958,542 – an increase of 0.9% on the previous year; and
- The pension compensation cap from 1 April 2014 will be £36,401.19 – an increase of 4.4% from the previous year
As a result of the latter, the maximum level of compensation available from the PPF to those at age 65 who are subject to the cap will be £32,761.07.
Both increases follow that of the general level of earnings – the levy ceiling is by reference to the year ending July 2013, whilst the compensation cap is by reference to year ending April 2013.
Auto-enrolment earnings parameters – draft Order published
The draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2014, which will give effect to the 2014/15 earnings parameters agreed in December (see Pensions Bulletin 2013/52), has been published.
This Pensions Bulletin does not constitute advice, nor should it be taken as an authoritative statement of the law. For further help, please contact David Everett at our London office or the partner who normally advises you.
