Nowadays, pension scheme trustees have to declare the identities of a scheme’s statutory employers every year on the scheme return. There’s a reason for this: trustees have to be vigilant to the risk of being left without a statutory employer and therefore losing members the protection of the Pension Protection Fund. It isn’t always obvious it’s happening. Bulk transfers and employer substitutions can cause problems if you don’t plan ahead, and it is a risk which is ever increasing as more and more schemes are closed to future accrual. (more…)
Archive for the ‘Pension Protection Fund’ Category
Following changes to the law earlier this year, it should be quicker for some pension schemes whose sponsoring employers have gone insolvent to go through their Pension Protection Fund (PPF) assessment period. This is to be welcomed, but the wording of the derivative contracts which some trustees enter into with banks (known as ISDA contracts) will have to be changed as a consequence.
“I ain’t afraid of no ghost!” I hear you say. Well, if you’re a pension scheme trustee with a ghost guarantor, maybe you should be!
The Pension Protection Fund contingent asset regime’s been with us for a few years now. Underfunded pension schemes get lower PPF levies if they’ve got a funding guarantee from a guarantor that has a lower insolvency risk than the scheme’s own sponsoring employers. But it’s come to the PPF’s attention that some guarantors mightn’t be quite what they seem – the ghost guarantors! (more…)
Could the Eurozone crisis mark the end of Type C contingent assets for Pension Protection Fund purposes?Thursday, 26 January 2012
Earlier this month Chris Jackson posted on the changes that have been made to PPF Type A guarantees under this year’s Pension Protection Fund levy determination, published in December 2011. Whilst Type A guarantees are by far the most popular type of contingent asset for PPF purposes, we do have a number of clients who have put in place or are looking to put in place Type C letters of credit. However the current Eurozone crisis is reducing the number of financial institutions that can meet the right criteria.
Christmas is over for another year and, with the last mince pie eaten and New Year’s resolution forgotten, everyone seems finally to have come back to work for a rest. Sadly there won’t be much time to rest for those pension schemes whose sponsoring employers are considering putting PPF contingent assets in place, the most popular by far being Type A guarantees. The deadline of 5pm on 30 March 2012 for submitting the paperwork might seem very far away but don’t be fooled by that*. (more…)