The Pension Protection Fund (PPF) is making changes to the actuarial assumptions used in s179 and s143 valuations, following a consultation.
By law, the PPF has to set its valuation assumptions to reflect pricing in the bulk annuity market.
• Section 143 valuations are used to determine whether a scheme should enter the PPF following an insolvency event.
• Section 179 valuations are used to calculate scheme underfunding to determine the risk-based pension protection levy that a scheme should pay.
As set out in the consultation, the most significant changes, which come into effect from tomorrow, December 1st, are:
• the use of separate discount rates for pensioners and non-pensioners post retirement;
• the use of yield indices that have durations that better match average liability durations, including the introduction of a new index-linked gilt yield; and
• updated mortality assumptions.
There are also consequential changes to valuations carried out under sections 152, 156 and 158.
A response to the consultation can be found here
Notes to Editors