We work with the scheme’s advisers during the assessment process, which can last up to two years, to investigate two key questions:
- Can the pension scheme be rescued?
- Can the pension scheme afford to secure benefits which are at least equal to the pensions we can pay?
If the answer to either of these questions is ‘no’, and the relevant processes have been completed, the scheme members will be transferred to us.
If the answer is ‘yes’, the scheme will either continue or wind-up without our involvement.
This short video provides an overview of the PPF assessment process, including what happens during the assessment process, what it means for members, and the role of scheme trustees.
Key milestones in our assessment period
These are some of the most important stages and milestones during our assessment period.
Validating the scheme
Once we receive an S120 insolvency notice about a scheme’s sponsoring employer, we’ll ‘validate’ the scheme to determine whether or not it should go through assessment. This takes up to 28 days, depending on the complexity of the scheme.
Appointing specialist advisers
Once a scheme has been validated, we’ll appoint firms with specialist skills and knowledge to take it through assessment as efficiently as possible. These specialists will usually include a trustee, an administration firm - who will also carry out the valuation later in the process - a legal adviser and an auditor.
Drafting the project plan
Once the specialist advisers have completed their fundamental checks on the scheme and its data, they put together a draft project plan and budget for our approval.
We’ll usually approve these plans within three months of receiving the initial insolvency notice.
Cleansing scheme data
A significant amount of work needs to be done to analyse and cleanse the scheme and member data, so that:
- Members are paid the correct amount of pension benefits
- A valuation is carried out that will give the true funding position of the scheme
Depending on the complexity, and any problems found, this stage could take anything between three to 18 months.
Valuation of the scheme's assets and liabilities
Once member data has been cleansed and the scheme benefit structure has been verified, an actuary will carry out an S143 valuation.
This determines whether the scheme transfers to us, or not:
- If the scheme is underfunded, it will transfer to us. The administrator will start working on the data that will allow us to take over pension payments. About three months later the scheme will transfer to us.
- If the scheme is overfunded, it will go through an insurance buyout to secure members compensation that is equal to or higher that the level of compensation we would pay.