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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.

The Section 143 assumptions guidance document can be found here
The Section 179 assumptions guidance document can be found here

A response to the consultation can be found here

Notes to Editors
The Pension Protection Fund:
The Pension Protection Fund protects millions of people throughout the United Kingdom who belong to defined benefit pension schemes. If their employers go bust, and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions. Tens of thousands of people now receive compensation from the PPF and hundreds of thousands more will do so in the future. The PPF is a public corporation, set up by the Pensions Act 2004, and is run by an independent Board.
For further press information contact:
PPF Press Office
020 7566 9775
[email protected]