The Pension Protection Fund (PPF) has overruled appeals that have already been deemed successful and is now charging companies millions of pounds more on their levy payments, claims Aon Consulting.
Aon claims that a number of companies with large deficits have received letters from the PPF in the past few days informing them that it is overruling dozens of appeals that had been previously approved by the PPF’s appointed advisers, Dun & Bradstreet (D&B).
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 the way it was designed. D&B approved those appeals and agreed to advise the PPF of the new scores.
Paul McGlone, principle and actuary at Aon Consulting said: “The PPF is effectively ignoring the advice of its own appointed experts in insolvency risk. The fact that the appeals were successful in the first place clearly suggests that D&B believe the appeals to be reasonable.
“The PPF has effectively misled these companies about their levy and therefore denied them the opportunity to consider other actions to reduce it. This decision will undermine confidence in the PPF.”
However, the PPF claims that only 14 out of 7,800 eligible schemes have been affected and that no scheme had received an invoice based on an incorrectly amended score. It said that it had sought further legal advice following the appeals and found that it would be unlawful to discount deficit figures in company accounts when working out failure scores.
A PPF spokesman said: “We admit that our initial advice to D&B about this issue was wrong and we apologise to the affected companies who have appealed their scores and had an appeal allowed on this basis.
“We are now in the process of confirming their original insolvency scores for the 2007-2008 levy year.
“We have now clarified our advice to D&B to ensure that no future appeals are accepted on this basis.”