PPF mulls buffer amid claims of overcharging
UK - The UK's Pension Protection Fund (PPF) is looking to set up a buffer fund with any surplus it might accrue in the future, IPE has learnt.
According to officials, the PPF is currently 88% funded, so there should be a 'reasonable' buffer in the PPF's finances to deal with future 'catastrophic shocks'.
For this reason, the fund - set up under the 2004 Pensions Act - says it seems legitimate to have some degree of surplus, which it would subsequently use as a buffer once it is fully funded.
But this news comes as Aon Consulting has flagged up the PPF ignored advice from consultant Dun & Bradstreet (D&B) on the issue of rebating certain schemes.
In a news release published yesterday, Aon argued the PPF has overruled appeals that had already been deemed successful.
"[The PPF] is now systematically overcharging companies to the tune of millions of pounds on their levy payments," said the firm.
It added: "Aon has learned that a number of companies with large deficits have been sent letters by the PPF in the past few days informing them that it is overruling dozens of appeals which had previously been approved by the PPF's appointed advisers on the issue, D&B."
According to Aon, this means the companies now face additional levies of millions of pounds, while having been misled by the PPF about their levy.
Aon said the appeals were on the basis that the system of 'failure scores' was devised when pension scheme deficits were not shown on company balance sheets, and so should continue to be applied in the way it was designed. D&B approved those appeals and agreed to advise the PPF of the new scores.
A spokesman for the PPF today confirmed the fund has apologised to 41 pension schemes which face higher levies as a result of the "mistake", though adding it would not apply the discount because of legal restrictions.
The PPF said it had told D&B to ignore a company pension scheme's underfunding, though it was later advised discounting the insolvency scores would have been illegal.
Aon has suggested the decision will undermine confidence in the PPF, and raised questions as to why it took the PPF so many months to discover the restrictions in their own legislation.
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