UK – The UK’s Pension Protection Fund (PPF) is to develop bespoke insolvency risk scores following its decision to replace Dun & Bradstreet (D&B) as its provider.
The PPF said the decision to replace D&B, which has helped assess a sponsor’s insolvency risk since the lifeboat fund was launched in 2005, came after an open tendering process.
Scores provided by new appointment Experian are set to be used from the 2015-16 levy period onwards, with both providers working together until then to ensure a smooth handover process.
According to a statement from the fund, it will develop a bespoke model to assess insolvency “with input from stakeholders” prior to the handover’s completion.
“This bespoke model will focus on measuring insolvency risk for the PPF’s universe of sponsoring employers, supported by Experian’s detailed understanding of the UK’s economic environment and its impact on commercial solvency,” the statement said.
It said it hoped the new scores would be available to all DB funds and their sponsors by early 2014.
David Heslop, the fund’s COO said: “Assessing the risk of an employer going bust, which could mean its pension scheme entering the PPF, is at the heart of how we calculate individual levies and how we assess our overall risk.
“It is essential we get the most suitable supplier to meet our future needs.”
The number of D&B risk bands was reduced when the PPF unveiled details of its new levy approach in 2011.
At the time, commentators said it would lead to greater stability, but also “significant” increases in charges as the band changed.
A spokesman for the PPF said the number of bands in the new score system would be a matter for discussion in the review.
But he stressed that the current D&B band approach would remain in place until the handover was completed.