The Pension Protection Fund (PPF) has appointed a group of specialist firms that stand ready to help trustees of defined benefit schemes whose sponsoring employer is in stressed or distressed circumstances, or expected to become insolvent and potentially enter the lifeboat fund.
The new panel replaces the ‘Trustee Advisory Panel’, which was launched in 2014 to offer services to schemes in a PPF-assessment only.
Now, according to the £32bn (€35.7bn) PPF, trustees can appoint a recommended expert panellist at an earlier stage than previously, to get advice and guidance that could help prevent insolvencies where possible, thereby potentially reducing claims on the fund.
In addition, if the sponsor does become insolvent the firms on the panel would ensure that the pension scheme was fully prepared for entry into the PPF assessment period.
This is the period during which the lifeboat fund checks if the pension scheme has enough assets to secure PPF-levels of benefits.
The firms will advise on issues including covenants, restructuring, contingency planning, and moral hazard, and provide transactional expertise. All have agreed to a set of terms and conditions and advantageous fee rates.
Sue Rivas, PPF’s director of scheme services, said: “I’m very excited about the new panel we’ve created.
“We very much hope this will lead to better member outcomes as well as extending our understanding of the issues that schemes experience pre-insolvency.”
Malcolm Weir, director of restructuring and insolvency, said: “We believe it is important that trustees have the expertise needed to protect schemes’ interests and maximise the likelihood of delivering the best outcome for the scheme and the PPF.
“We encourage scheme trustees to recognise their knowledge gaps and to appoint a panel trustee and/or restructuring and insolvency adviser to support them with specialist advice as early as possible.”
As with the PPF’s other panels, the new panel – for ‘Trustee and Support Services’ – was formed after a tender exercise.
The firms that have been appointed are:
- 20-20 Trustees
- CVR Global
- Dalriada Trustees Limited
- FRP Advisory
- ITS Limited
- Lincoln Pensions
- Open Trustees
- Osborne Clarke LLP
- Punter Southall Governance Services
- Smith & Williamson
As at the end of April there were 3,503 schemes in deficit in the PPF 7800 Index, which provides the estimated funding position for DB schemes potentially eligible for entry to the PPF on a so-called section 179 basis.
A scheme’s 179 liabilities represent, broadly speaking, the premium that would have to be paid to an insurance company to take on the payment of PPF levels of compensation.
The funding ratio in the index increased from 92.5% as at the end of March to 93.1%, with the aggregate deficit decreasing to £128.5bn from £135.9bn.
Given the timing of the appointment of the panel the PPF’s decision to create it would likely have needed to have been taken well in advance of the outbreak of the coronavirus, and a spokeswoman confirmed that the new panel has not been set-up because of COVID-19, with procurement of the panel starting in June last year.