PPF stands by duty of care demand on ABC valuations
The UK’s Pension Protection Fund (PPF) has resisted calls to relax guidance on asset-backed contributions (ABCs), arguing that it was reasonable that valuations not covered by a duty of care should be disregarded.
David Taylor, the lifeboat scheme’s director of strategy and legal, said the final levy rules for the 2015-16 financial year remained largely unchanged from a draft published in October.
“Consistent with the policy for the first levy triennium, our intention is that we will maintain these rules for a three year period.
“We recognise however that the move to the PPF-specific model, while being well-received, is a significant change and will therefore keep the performance of the model under review,” he added.
The 2015-16 financial year will mark the end of the PPF’s current levy formula as it shifts to a bespoke model built in conjunction with Experian.
The final formula was largely welcomed, with Neil Carberry of business lobby group CBI noting that it was now important the model remained stable, allowing companies to adapt.
Carberry, director of employment and skills at the group, said a few issues still needed to be addressed, such as the treatment of overseas parent companies.
The new rules will still require those involved in valuing ABCs – including assets from overseas, after a concession to expand the underlying assets beyond UK property – to have a legal duty of care to the PPF.
In its statement, the fund said that a number of responses questioned how the proposed duty of care would operate, and a minority of responses objected to its use.
The PPF summarised the responses, which argued that funds were already protected by consultants’ duty of care to trustees, a point rejected.
“Our view remains that if the trustees’ advisers aren’t willing to stand behind their valuation it is reasonable that the ABC receives no recognition.”
Joanne Shepard, senior consultant at Towers Watson, said the PPF was very clear that the certification was needed, and if not, then the ABCs should not be submitted.
“Really, their position is they do not want to take into account asset-backed contributions, that’s why they feel it’s reasonable to have this duty of care,” she said.