UK – The Pension Protection Fund’s plans to change the risk-based levy have been broadly welcomed by the industry today.
The amendments will allow extra pension fund contributions to be taken into account when the levy is calculated. And it said it was looking at so-called “contingent assets” such as letters of credit.
It also postponed the deadline for submitting valuations to March 31. The previous deadline of December 31 was seen as unrealistic because there is a bottleneck of actuarial resources to carry them out.
Industry bodies and consultants backed the changes. Hewitt Associates said it was refreshing that the PPF was listening to the concerns of the pensions industry.
The National Association of Pension Funds said the move was a welcome indication that the was willing to listen to the industry
It said the changes take on board many of the issues the NAPF and others had raised.
While welcoming the move, Lane Clark & Peacock said it does not address the use of the Dun and Bradstreet Failure Score for assessing employer insolvency risk.
“Our experience suggests that this measure can be highly volatile and heavily influenced by matters such as county court judgments on bill payments, which often have no relevance to a company's likelihood of failing over the next year," it said.
John Cridland, deputy director general at the Confederation of British Industry, said the CBI was pleased the PPF had responded so quickly to some of employers' concerns.
“We also welcome the PPF's decision to include companies' special contributions when considering their valuations, as employers have made over £17bn in additional contributions in the last three years alone.
"But much remains to be done. The PPF must ensure that its 'Insolvency Risk' measures reflect the most accurate view of a company's risk.
“It must take into account the financial strength of any parent company, and for the largest firms it must be prepared to supplement the credit scores provided by Dun & Bradstreet with the existing ratings provided by specialist rating agencies like S&P, Moody's or Fitch's.”
Elsewhere the Accounting Standards Board has announced that it is undertaking a research project into the financial reporting of pensions.
It said the recent implementation of its FRS17 standard had “given rise to a number of comments about the accounting for pensions” - particularly for defined benefit arrangements