Email: consultation@ppf.gsi.gov.uk
Chris Collins
Pension Protection Fund
Renaissance
12 Dingwall Road
Croydon
Surrey CR0 2NA
November 13th 2014
Our Ref: JM/JB/4.1
Dear Mr. Collins,
CONSULTATION DOCUMENT: THE TRIENNIUM POLICY STATEMENT AND 2015/2016
PENSION PROTECTION LEVY
We welcome the opportunity to comment on the above consultation document.
INTRODUCTION TO THE SOCIETY OF PENSION PROFESSIONALS
SPP is the representative body for a wide range of providers of advice and services to work-based
pension schemes and to their sponsors. SPP’s Members’ profile is a key strength and includes
accounting firms, solicitors, insurance companies, investment houses, investment performance
measurers, consultants and actuaries, independent trustees and external pension administrators.
SPP is the only body to focus on the whole range of pension related services across the private
pensions sector, and through such a wide spread of providers of advice and services. We do not
represent any particular type of provision or any one interest - body or group.
Many thousands of individuals and pension funds use the services of one or more of SPP’s
Members, including the overwhelming majority of the 500 largest UK pension funds. SPP’s
growing membership collectively employs some 15,000 people providing pension-related advice
and services.
The consultation paper has been considered by SPP’s Actuarial Committee, which comprises
representatives of actuaries and consultants.
The Society of Pension Professionals was previously known as the Society of Pension
Consultants (SPC).
COMMENTS ON THE CONSULTATION DOCUMENT
1) We naturally welcome the reduction in the Levy estimate for 2015/2016 and the prospect of
further reductions in the following two years. However, the figures presented in the policy
statement do represent a “neutral” levy, which we understand, in broad terms, to mean that
they have been prepared on the basis of a now historic model. It would be helpful if PPF
could give an indication of what the levy quantum would be, if it were calculated using the new
model, as we understand that this is more predictive than the previous one.
2) Mortgage Age: We welcome the conclusion at paragraph 3.2.12 that, where practical, some
consideration should be given to the wider circumstances in which a new charge is
established.
Addressing the consultation questions on mortgage age.
Question 1: What evidence is available to assess how to best judge whether a mortgage
or mortgages is/are clearly immaterial?
We are not sure that there is an evidence base, but practical experience suggests that,
particularly in the case of larger companies, mortgage age can have a disproportionately
The Society of Pension Professionals
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Chris Collins
Page 2
negative impact on the assessment of insolvency risk. We would therefore welcome a
materiality threshold, but strongly suggest that this is increased from the proposed 0.5% level.
A figure more in the region of 2% could better prevent nominal mortgages affecting
companies’ Experian scores.
Question 2: Are there other factors, which we should consider?
We have no other factors to suggest.
Question 3: What are your views on the proposed limits and the exclusion of all entities
with a CR?
We suggest that the credit rating exclusion is certainly worth exploring.
Question 4: Do you have any other comments on the certificates published on the PPF
website and the process for certifying secured charges for exclusion from the
mortgage age variable?
We have no comments.
3) Creation of a Duty of Care: The section on Reliance in paragraph 7.6.2 appears to indicate
an intention to create a duty of care directly between the adviser or advisers and PPF, with
apparently unlimited liability.
Given that there is already a well-established chain of accountability from PPF to the trustees
and in turn to their advisers, we are surprised at this intention to create a duty of care directly
between advisers and PPF. From a practical point of view, this would imply that PPF would
need to agree terms of business with the advisers concerned and there could be difficulties
for PPF identifying specific duties where there are multiple advisers.
4) Cut-off Date for Submission of Employer Data: Paragraph 10.2.1 highlights the importance
of the October 31st deadline. We would suggest that this is moved back by one month to
November 30th. We make this suggestion because we understand that Experian data was
changing for employers in the lead up to October 31st (for example nil scores for Capital
Employed were adjusted), and so employers were not able to see the final data in sufficient
time to consider whether it was appropriate. We all accept that the Experian PPF model is
new and will take a little time to bed in, but allowing companies an additional month to
November 30th, to adjust their Experian scores will help ensure the integrity of the first few
months’ insolvency calculations.
Yours sincerely
John Mortimer
Secretary