UK - The Pension Protection Fund (PPF) will give concessions to companies that make cash injections to reduce their pension deficit as part of a raft of changes made to its risk-based levy.
The PPF made a number of alterations to the contentious levy, designed to protect employee pensions in the case of employer insolvency, following the closure of a consultation period.
PPF investment and finance director Partha Dasgupta said the fund had taken into account the three most contentious issues and revised two of them accordingly.
“I don’t think they are concessions, we see these as additional proposals that have come about as part of a discussion with relative parties,” he said. “We listened to the issues people raised, and ultimately there will be others, but these are the main ones.”
As part of the new levy, special cash contributions made since the last scheme valuation will now be recognised and the deadline for submitting scheme valuations has been extended to 31 March, 2006.
In addition, the PPF board will take account of contingent assets in the risk-based levy calculation, and will bring forward proposals for consultation.
Confederation of British Industry director general John Cridland welcomed the changes but said more needed to be done.
“The PPF must ensure its ‘insolvency risk’ measures reflect the most accurate view of a company’s risk,” he said.
It must take into account the financial strength of any parent company, and for the largest firms it must be prepared to supplement the credit scores provided by Dun & Bradstreet with the existing ratings provided by agencies like S&P, he said.
Punter Southall principal Andy Scott added that given the time scales and what the PPF was trying to achieve, the latest announcements were probably as good as the industry could expect.
Scott agreed the changes addressed the contentious issues, but said the most important issue – cost – had yet to be discussed.
He added: “At the end of the day it is still going to mean expensive levies for a number of companies, and it could lead some into insolvency.”
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