The Pension Protection Fund (PPF) is a discontinuance fund which takes assets from the underfunded schemes of insolvent employers and provides a reduced level of benefits.
It imposes a levy on solvent funds and employers to pay for its deficits (around £750m pa) and because of increased buy-outs by solvent schemes, the universe of such schemes able to pay levies is diminishing, while the call by such schemes is increasing; the long-term viability (or at least the benefits indicated) of the PPF is very much in doubt.
CORONAVIRUS (COVID-19) UPDATE: As a result of coronavirus, the PPF decided to make certain changes to its policies. For instance, the PPF will accept e-signatures and other forms of confirmation for PPF-specific documents (eg officer’s certificates), but will not accept paper s 120 notifications.Moreover, to help businesses and schemes pay their levy invoices during the pandemic, the PPF put in place various measures for the levy years 2020/21, 2021/22 and 2022/23 which limit the size of that levy and allow for the late payment of the levy. These measures are discussed in this Practice Note.The PPF has also introduced the option of electronic levy invoices.For more information, see Practice Note: Coronavirus (COVID-19)—the pensions implications for trustees—The PPF’s position.The Pension Protection Fund (PPF) is a statutory fund established under the provisions of the Pensions Act 2004 (PeA 2004) whose principal purpose is to provide compensatory benefits to members of eligible defined benefit (DB) occupational pension schemes where:•the scheme’s sponsoring employer(s) has suffered a qualifying insolvency event, and•the scheme’s funding position is such that its net assets are less than its ‘protected liabilities’. Broadly speaking, protected liabilities are measured by reference to: ◦the cost of securing members’ benefits corresponding to the levels of compensation the PPF would provide if it accepted responsibility for
THIS PRACTICE NOTE APPLIES ONLY TO DEFINED BENEFIT AND HYBRID OCCUPATIONAL PENSION SCHEMESIn most cases, the process of entry into the PPF will begin when the sponsoring employer of an eligible scheme suffers a qualifying insolvency event.For a scheme to qualify for entry into the PPF, its sponsoring employer must meet the statutory definition of ‘employer’ for that purpose. The definition of ‘employer’ varies depending on whether:•the scheme is a single-employer scheme or is/has been a multi-employer scheme•the scheme has active members at the date of the qualifying insolvency eventDefinition of employer under section 318 of the Pensions Act 2004Under section 318 of the Pensions Act 2004 (PeA 2004), an employer in relation to an occupational pension scheme is defined as the employer of ‘persons in the description of employment to which the scheme in question relates’ (the ‘relevant employees’).Case law currently indicates that relevant employees include:•active members of the scheme—note the case G4S v G4S Trustees Ltd which indicates that members with a final salary link are not active members (see Preserving a final salary link—what does it mean? — Is a member with a final salary link still an active member?), and•employees who are eligible to join the schemebut exclude deferred members or pensioners.However, the definition of ‘employer’ is extended in relation to:
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Standard order 1.1—financial directions order—longer version In the Family Court Sitting at [Court name] No: [Case number] [ The Matrimonial Causes Act 1973 OR The Civil Partnership Act 2004 OR The Child Support Act 1991 OR Schedule 1 to the Children Act 1989 OR The Inheritance (Provision for Family and Dependants) Act 1975 OR The Matrimonial and Family Proceedings Act 1984 and Schedule 7 to the Civil Partnership Act 2004 OR The Trusts of Land and Appointment of Trustees Act 1996 OR The Married Women’s Property Act 1882 and ss 67, 68 and 74 of the Civil Partnership Act 2004 ] OR The [Marriage OR Civil Partnership OR Relationship OR Family] of [applicant name] and [respondent name] After hearing [name the advocate(s) who appeared] After consideration of the documents lodged by the parties [After reading the statements and hearing the witnesses specified in para [para number] of the Recitals below] Order made by [name of judge] on [date] sitting in [open court OR private OR at a [first directions appointment OR financial dispute resolution appointment OR case management hearing OR WARNING: IF YOU DO NOT COMPLY WITH THIS ORDER, YOU MAY BE HELD TO BE IN CONTEMPT OF COURT AND YOU MAY BE SENT TO PRISON, BE FINED, OR HAVE YOUR ASSETS SEIZED. [ The parties 1 The applicant is [applicant name] The [first] respondent is [respondent name] [The intervener is [intervener’s names] Further respondent[s]: [further respondents’ names]] [Specify if any party acts by a litigation friend] Definitions 2 Children of the
Share purchase agreement—long form pensions warranties (where target company has a defined benefit (DB) scheme) This precedent has been prepared on the basis that the drafter is acting for the buyer Drafted on the basis that the target company (the Company) is a subsidiary of the Seller. You are strongly advised to involve a pensions specialist at the earliest opportunity. 1 Definitions For the purposes of paragraphs 2 to 9 inclusive: Employee means a present or former employee, officer or director of the Company [or of any Group Company ] [and any other person taking part in the management of the affairs of the Company]; Pension Scheme[s] mean[s] [[name(s) of scheme(s)] OR an arrangement or practice for the payment of, or contribution towards, an annuity, pension, lump sum, gratuity or similar benefit to be given on retirement, ill-health, death or change in service status, or pursuant to a pension sharing order, in relation to the service or historic service of an Employee or any other person, or for the benefit of that individual’s dependants]. 2 No other obligations or commitments Except as provided for by the Pension Scheme[s]: 2.1 [the Company is not OR no Group Company is] participating and never has participated in any agreement or arrangement, or has entered into any obligation or commitment (whether funded or unfunded and whether legally binding or otherwise), to provide or contribute towards any pensions, annuities, lump
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A property subject to a legal charge in favour of a pension scheme is being sold. The charge is in the legal name of a corporate trustee as trustee of the pension scheme. Before completion and under section 161 of the Pensions Act 2004 (PA 2004), all assets and liabilities of the pension scheme are being transferred from the pension scheme to the Pension Protection Fund (PPF). The transfer happens when 'a transfer notice is given to the trustees...of an eligible scheme' under PA 2004, s 161(1). The PPF will need to execute a DS1 to release the charge, but what evidence will HMLR require in order to evidence that legal title to the charge has transferred from the corporate trustee to the PPF? The Pension Protection Fund (PPF) is a statutory body whose main function is to pay the pension benefits of members of eligible pension schemes (up to a certain level) where a ‘qualifying insolvency event’ (eg administration) has occurred in relation to their employer. When a pension scheme enters the PPF, the Board of the PPF must give the pension scheme trustee a transfer notice (see
Are there regulations which extend the Pensions Regulator (Notifiable Events) Regulations 2005, SI 2005/900 to former employers? The purpose of the Pensions Regulator (Notifiable Events) Regulations 2005 (Notifiable Events Regulations), SI 2005/900, is to give the Pensions Regulator advance warning of events which could cause a scheme, or part of it, to enter an assessment period for the Pension Protection Fund (PPF). The definition of employer is extended for PPF purposes and assessment periods can be triggered in relation to former employers. For example, the Occupational Pension Schemes (Miscellaneous Amendments) Regulations 2005 (OPS(MA)R 2005), SI 2005/2113, reg 5(3) extends the definition in the Pension Protection Fund (Entry Rules) Regulations 2005, SI 2005/590 to include the former employer in relation to a scheme which has no active members. OPS(MA)R 2005, SI 2005/2113 extends the definition of employer to include former employers in other Regulations but not in the Notifiable Events Regulations, SI
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