Following recent court cases we’ve been considering the action we need to take to address the judgments. We’re aware that actuaries need to determine how to reflect the impact of these judgments in new s179 valuations which will be used to calculate schemes’ levy invoices for 2021/22.

Following the judgment in the Hampshire case by the European Court of Justice, what level of compensation should be taken into account in s179 valuations?

Valuations should continue to be carried out under the current s179 guidance, G8, and no additional allowance should be made as a result of the Hampshire judgment. This is our interim position and will be reviewed as we work through the impact of the Hampshire judgment and the Hughes case referred to below.

Find out more about how we’re implementing the European Court of Justice ruling

Following the judgment in the Beaton case, what level of compensation should be taken into account in s179 valuations?

Schemes should take account of the effect of the judgment on the valuation of the schemes’ protected liabilities.  

Does the 2018 Lloyds judgment mean that GMP equalisation and the application of the statutory underpin needs to be taken into account in s179 valuations?

New s179 valuations with effective dates in December 2018 or later should include an allowance for additional liabilities arising as a result of the 2018 Lloyds judgment. We recognise the interim difficulties in calculating such allowances and providing the necessary certifications and have published an information note to assist actuaries in the process. 

Following the judgment in the Hughes case, what level of compensation should be taken into account in s179 valuations?

Valuations should continue to be carried out under the current s179 guidance, G8, and no additional allowance should be made as a result of the Hughes judgment.  This is our interim position and will be reviewed as we work through the impact of the judgment and the appeals.

Do section 179 valuations need to take account of the 2020 Lloyds judgment?

Section 179 valuations do not need to include an allowance for the impact of the November 2020 Lloyds judgment if the trustees have not yet decided what action they will take in response to the judgment, or if the trustees are uncertain what impact (if any) it will have on the scheme assets and/or liabilities. 

Our analysis indicates that any impact arising from the judgment on the scheme is likely to be extremely small.

We note that the actual impact of the November 2020 Lloyds judgment will ultimately emerge in future s179 valuations once trustees have determined what action they are going to take in response to the judgment. For example, there may be a reduction in assets if top up payments are to be made in respect of past transfer values.

When certifying DRCs under Option Alpha should actuaries treat the additional compensation payable as a result of the Hampshire, Beaton, Lloyds (2018 and 2020) and Hughes judgments as an augmentation?

For the 2021/22 levy year it is not necessary to treat the impact of the Hampshire, Beaton, Lloyds (2018 and 2020) and Hughes judgments as an augmentation when certifying DRCs under Option Alpha.

Will you be adjusting s179 valuations to take account of the Hampshire, Beaton, Lloyds (2018 and 2020) and Hughes judgments?

For the 2021/22 levy year we will not be adjusting s179 valuations to take account of the Hampshire, Beaton, Lloyds (2018 and 2020) and Hughes judgments.

If you have any further questions about how the impact of these judgments please contact us on 0345 600 2541 or email [email protected].

Last updated: January 2021