C1C2Part 2The Board of the Pension Protection Fund
Pt. 2 modified in part (9.3.2005 for specified purposes, 1.4.2005 for specified purposes, 6.4.2005 in so far as not already in force (except ch. 4)) by The Pension Protection Fund (Multi-employer Schemes) (Modification) Regulations 2005 (S.I. 2005/441), regs. 1, 2-60, 71, 72
C2C1Chapter 3Pension protection
Valuation of assets and liabilities
143C1C2Board’s obligation to obtain valuation of assets and protected liabilities
I41
This section applies in a case within subsection (1) of section 127 or 128.
I42
For the purposes of determining whether the condition in subsection (2)(a) of the section in question is satisfied, the Board must, as soon as reasonably practicable, obtain an actuarial valuation of the scheme as at the relevant time.
I13
For those purposes, regulations may provide that any of the following are to be regarded as assets or protected liabilities of the scheme at the relevant time if prescribed requirements are met—
a
a debt due to the trustees or managers of the scheme by virtue of a contribution notice issued under section 38, 47 or 55 during the pre-approval period;
b
an obligation arising under financial support for the scheme (within the meaning of section 45) put in place during the pre-approval period in accordance with a financial support direction issued under section 43;
c
an obligation imposed by a restoration order made under section 52 during the pre-approval period in respect of a transaction involving assets of the scheme.
I14
For the purposes of this section, regulations may prescribe how—
a
the assets and the protected liabilities of eligible schemes, and
b
their amount or value,
are to be determined, calculated and verified.
I15
Regulations under subsection (4) may provide, in particular, that when calculating the amount or value of assets or protected liabilities of an eligible scheme at the relevant time which consist of any of the following—
a
a debt (including any contingent debt) due to the trustees or managers of the scheme from the employer under section 75 of the Pensions Act 1995 (c. 26) (deficiencies in the scheme assets),
b
a debt due to the trustees or managers of the scheme by virtue of a contribution notice issued under section 38, 47 or 55,
c
an obligation arising under financial support for the scheme (within the meaning of section 45) put in place in accordance with a financial support direction issued under section 43, or
d
an obligation imposed by a restoration order made under section 52 in respect of a transaction involving assets of the scheme,
account must be taken in the prescribed manner of prescribed events which occur during the pre-approval period.
F15A
Subsection (5B) applies if–
a
during the pre-approval period any liability to provide pensions or other benefits to or in respect of any member or members under the scheme is discharged by virtue of regulations under section 135(4) or the Board validating any action mentioned in section 135(9), and
b
at the relevant time the protected liabilities of the scheme include any cost within section 131(1)(a) relating to compensation in respect of those pensions or other benefits.
5B
If this subsection applies, for the purposes mentioned in subsection (2)–
a
in determining that cost the effect of the discharge on the compensation payable in respect of those pensions or other benefits under paragraph 23A of Schedule 7 must be taken into account,
b
in a case where assets of the scheme at the relevant time were transferred from the scheme during the pre-approval period in consideration for the discharge, those assets are not to be regarded as assets of the scheme at the relevant time, and
c
in a case where assets that were not assets of the scheme at that time (“later-acquired assets”) were so transferred, the value of the assets of the scheme at that time is to be reduced by the value of the later-acquired assets at the time of the discharge.
I46
Subject to any provision made under subsection (4), the matters mentioned in paragraphs (a) and (b) of that subsection are to be determined, calculated and verified in accordance with guidance issued by the Board.
I47
In calculating the amount of any liabilities for the purposes of this section, a provision of the scheme rules which limits the amount of the scheme’s liabilities by reference to the value of its assets is to be disregarded.
I48
The duty imposed by subsection (2) ceases to apply if and when the Board ceases to be involved with the scheme.
I49
Nothing in subsection (2) requires the actuarial valuation to be obtained during any period when the Board considers that an event may occur which, by virtue of regulations under subsection (3) or (4) F2or by virtue of subsection (5B) , may affect the value of the assets or the amount of the protected liabilities of the scheme for the purposes of the valuation.
I410
In a case where there are one or more reviewable ill health pensions (within the meaning of section 140), nothing in subsection (2) requires the actuarial valuation to be obtained during the period mentioned in section 141(5)(b) (period during which Board may exercise its power to make a decision following a review) relating to any such pension.
I2I511
For the purposes of this section—
a
“actuarial valuation”, in relation to the scheme, means a written valuation of the assets and protected liabilities of the scheme which—
i
is in the prescribed form and contains the prescribed information, and
ii
is prepared and signed by—
a
a person with prescribed qualifications or experience, or
b
a person approved by the Secretary of State,
b
“the pre-approval period”, in relation to the scheme, means the period which—
i
begins immediately after the relevant time, and
ii
ends immediately before the time the Board first approves a valuation of the scheme under section 144 after the relevant time,
c
“the relevant time”—
i
in a case within subsection (1) of section 127, has the meaning given in subsection (4)(b) of that section, and
ii
in a case within subsection (1) of section 128, has the meaning given in subsection (3)(b) of that section, and
d
references to “assets” do not include assets representing the value of any rights in respect of money purchase benefits under the scheme rules.
I7C1C3C2144C1C2Approval of valuation
1
This section applies where the Board obtains a valuation in respect of a scheme under section 143.
2
Where the Board is satisfied that the valuation has been prepared in accordance with that section, it must—
a
approve the valuation, and
b
give a copy of the valuation to—
i
the Regulator,
ii
the trustees or managers of the scheme, and
iii
any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
3
Where the Board is not so satisfied, it must obtain another valuation under that section.
C1C2145C1C2Binding valuations
I61
For the purposes of this Chapter a valuation obtained under section 143 is not binding until—
a
it is approved under section 144,
b
the period within which the approval may be reviewed by virtue of Chapter 6 has expired, and
c
if the approval is so reviewed—
i
the review and any reconsideration,
ii
any reference to the PPF Ombudsman in respect of the approval, and
iii
any appeal against his determination or directions,
has been finally disposed of.
I62
For the purposes of determining whether or not the condition in section 127(2)(a) or, as the case may be, section 128(2)(a) (condition that scheme assets are less than protected liabilities) is satisfied in relation to a scheme, a binding valuation is conclusive.
This subsection is subject to section 172(3) and (4) (treatment of fraud compensation payments).
I63
Where a valuation becomes binding under this section the Board must as soon as reasonably practicable give a notice to that effect together with a copy of the binding valuation to—
a
the Regulator,
b
the trustees or managers of the scheme, and
c
any insolvency practitioner in relation to the employer or, if there is no such insolvency practitioner, the employer.
I34
A notice under subsection (3) must be in the prescribed form and contain the prescribed information.
Pt. 2 modified (8.3.2005 for specified purposes, 6.4.2005 in so far as not already in force) by The Pension Protection Fund (Partially Guaranteed Schemes) (Modification) Regulations 2005 (S.I. 2005/277), regs. 1(1), 2-11