Employers have welcomed concessions made by the Pensions Protection Fund (PPF) that address key concerns surrounding pension scheme funding and the proposed risk-based levy. Graham Brown, pensions manager at charity Barnardo’s, described the announcement as a ‘leap forward’.
He welcomed the recognition of additional contributions and said many employers had ring-fenced assets to ensure future pension scheme benefits. Brown added that the intention was to make PPF valuations easier and cheaper. John Hayhurst, manager of HR business services at rail operator GNER said the PPF’s intention to consider contingent assets was positive, and was pleased it had taken heed of employer concerns. "A number of schemes are not in surplus, and whatever makes it easier [for those schemes] is a good development".
While the announcement looked positive for employers, Nicholas Greenacre, senior associate at law firm White and Case, warned them that it was not yet time for ‘significant action’. "It’s good news potentially. There’s some incentive there now for contributions, there are indications [the PPF] is more in favour of employers, but there [should be] a wait until it finalises its views," he said.
Following extensive lobbying from employers, the PPF is now prepared to take into account any special cash contributions made by employers to repair deficits since their schemes were last valued, in calculating the 2006/07 risk-based levy. In an update on its levy consultation issued on 14 October, the PPF said it will also incorporate in its proposals an extension of the deadline for employers to submit pensions scheme valuations, by three months to a watershed date of 31 March 2006.
The PPF also pledged to simplify the pension scheme valuation process and to consider a firm’s contingent assets.