Pension Protection Fund Levy Certification 2021/22 – deadline soon
The deadline for trustees and sponsors to certify contingent assets to reduce their Pension Protection Fund (PPF) levy will soon be upon us. This includes group company guarantees (“Type A” contingent assets) and asset backed contribution (“ABC”) structures. Many will have received levy benefit from these assets in previous years but will need to re-certify them by 31 March 2021 to do so again.
We can help you meet applicable requirements:
- Where the levy saving from a guarantee is over £100k, the PPF requires that trustees obtain a Guarantor Strength Report (GSR) to support certification
- Even where the levy saving is less than £100k, we recommend that a GSR is obtained to demonstrate that the trustees have considered all relevant factors before certification
- As we have seen previously, obtaining a GSR will improve the likelihood that levy credit is given should the PPF choose to review the certification at a later stage
We recommend that trustees take the following actions to ensure a smooth PPF certification process:
- Work with your advisors to estimate the potential levy saving to understand whether a GSR is required
- Engage early with the employer and guarantor to ensure relevant information is shared in good time
- Keep records of all steps in the process to evidence that a reasonable approach has been taken to the meet the PPF’s requirements. This will be increasingly important with the PPF having moved away from a ‘tick box’ approach, with more judgement required
We have seen examples of certification processes being left too late with unnecessary costs being incurred as a result, and trustees should ensure sufficient time to prepare ahead of Wednesday 31 March 2021. Therefore, we recommend commencing the process as soon as possible.
Contact Hamish Reeves to find out more.