PPF contingent asset certification
Defined benefit schemes can obtain significant reductions in their annual PPF Levy by certifying their contingent assets. We help trustees assess the value of these assets in accordance with the PPF’s strict requirements.
All defined benefit schemes must pay an annual levy to the PPF based on their funding level and estimated likelihood of sponsor insolvency – this can be a material recurring cost for many schemes.
Trustees can reduce this cost by putting in place qualifying contingent asset support including parental guarantees and asset-backed funding structures (ABFs).
To claim a levy reduction, trustees must certify the value of these contingent assets each year. The PPF requires that this valuation is performed under a stressed insolvency scenario where all employers are assumed to be insolvent, and which then considers the value that can be recovered from the guarantor / ABF asset in that scenario.
We can help trustees understand the realisable recovery from their contingent assets in this scenario, so that they can determine the value to certify them for.
Since March 2018, all schemes reducing their levy by more than £100,000 through a parental guarantee must have obtained a suitable guarantor strength report from an expert advisor in order to obtain the levy reduction.