The Pension Protection Fund (PPF), the UK’s defined benefit lifeboat fund, is consulting on proposed changes to the assumptions used for UK pension fund valuations under sections 143 and 179 of the Pensions Act 2004.
The assumptions are used to estimate the cost of securing PPF levels of compensation with an insurer and underpin section 143 valuations conducted during PPF assessment periods, as well as section 179 valuations used for a variety of purposes including, historically, PPF levy contributions.
The consultation follows a review of bulk annuity market pricing, which found pricing had become more competitive since the PPF’s last detailed review.
The main proposed changes cover discount rates and longevity assumptions. The lifeboat said the proposed updates are intended to keep the assumptions aligned with current buyout pricing and would generally reduce estimated scheme liabilities under the valuation bases.
The current standard assumptions were set after a 2023 review, with guidance updated in 2024 to allow bespoke adjustments to the section 143 discount rate in limited circumstances.
The current consultation will close on 16 September 2026, and subject to the outcome of the consultation, the PPF intends to publish its final decision in October 2026. The lifeboat currently expects the revised assumptions to apply to valuations with an effective date on or after 31 May 2026.
Aaron Pang, acting chief actuary at the PPF, said: “We regularly review our valuation assumptions to ensure they remain appropriately aligned with the bulk annuity market and continue to meet the objectives set out in legislation.
“Our latest review suggests that market pricing has moved since the assumptions were last comprehensively updated. The proposals in this consultation are intended to reflect those developments while continuing to provide a practical and proportionate framework for valuations.”
