The PPF certification deadline is on the horizon – we share our tips for trustees

With the New Year in the rear-view mirror, focus in the world of DB pensions quickly turns to the PPF certification deadline.

Trustees and sponsors wishing to certify contingent assets (e.g. guarantees and asset-backed funding structures) to help manage Pension Protection Fund (“PPF”) levies will need to re-certify them by 31 March 2020.

Although the contingent asset certification requirements are largely unchanged for this year, trustees will still need to obtain updated advice even if they’ve certified the contingent asset before. As the PPF is expecting to collect £620m in levies, an 8% increase on last year, savings from certification may be substantial for many schemes.

We have guided many clients through successful PPF contingent asset certification and asset backed contribution (“ABC”) valuation exercises, helping our clients achieve levy savings of over £6m in 2019 alone.

However, unfortunately we have seen examples of certification processes being left too late leading to unnecessary costs being incurred or even a failure to certify by the deadline.

So, what can trustees do to make the process as smooth as possible?

Most importantly trustees should ensure sufficient time to prepare ahead of the deadline – we recommend commencing the process now.

In addition, in our experience, the following actions can help:

  1. Work with your advisors to estimate the potential levy saving to understand whether a guarantor strength report is required
  2. Engage early with the employer and guarantor to ensure relevant information is shared in good time
  3. Keep records of all steps in the process to evidence that a reasonable approach has been taken to the meet the PPF’s requirements, as more judgement is required than in previous years.

A typical PPF levy certification can take between six to eight weeks from start to finish, so now is a good time to begin the process.

If you have any questions or would like more information on how we can help, please get in touch with Hamish Reeves.