Hogan Lovells

Summary

The Pension Protection Fund (PPF) has issued a consultation paper and revised draft standard contingent assets forms for consultation. 

The PPF has explained that the revisions to the Type A and Type B contingent asset forms are intended to clarify that:

·         any deficit repair payments made by the employer, guarantor or another guarantor do not have the effect of reducing the level of the cap on the guarantee (the "Cap Interpretation" issue); and

·         payments made under a guarantee but outside an insolvency situation should not erode the value of any cap on the guarantee: instead, the  fixed cap must remain available in full in the event of the employer's insolvency (the "Cap Operation" issue).

The draft revised documents do not cover how the Cap Operation issue should work in relation to multi-employer schemes, as the PPF is seeking further input from the pension industry.

When must the revised standards be used?

The consultation document explains that:

·         new contingent asset agreements entered into after the date of publication of the new standards (expected to be in January 2018) must use the new documents;

·         existing contingent asset agreements executed before publication of the final revised documents may continue to be submitted for recognition in the 2018/19 levy year only;

·         existing Type A and Type B agreements will not need to be re-executed using the new standards for the purposes of the 2018/19 levy only; and

·         for existing Type A and Type B agreements (including agreements executed after the consultation was issued but before publication of final documents in 2018) it is likely that action to adopt the new standards will be required for the 2019/20 levy year.



Date Accessed: 03/12/2021