Why trustees will be spending more time on PPF certification, not less

It was no surprise the Pensions Regulator’s latest DB code recognised the potential value to both schemes and sponsors of contingent assets where trustees agree "to accept more risk than can be supported by their available employer covenant”.

Asset-backed contributions get a few paragraphs of their own in the code too, and are acknowledged as having the potential to “improve a scheme’s security by providing access to valuable assets or cash flow which were previously out of reach”.

Neither of these funding support mechanisms escapes, however, without some cautionary words from the regulator on the need for trustees to unpack and understand the true value and complexities of what may be on offer.

Of course, as well as helping to reduce scheme funding risks, having an arrangement such as a parent guarantee or ABC in place may also have a positive impact on the amount of Pension Protection Fund levy that has to be paid.

This, in turn, means the PPF needs to be satisfied with the value that can be placed on it. The deadline for schemes to meet the annual certification requirements is now less than 10 weeks away.

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