On the go: The Pension Protection Fund has issued updated guidance accounting for the judgements in the Hampshire and Bauer cases and the disapplication of the PPF compensation cap, confirming that no further allowance needs to be made for their impacts.
The Hughes Court of Appeal Judgement in July confirmed that the PPF compensation cap should be disapplied, leading to a change in the PPF’s benefits structure. The judgement was similar to that in the Hampshire case, and ruled that the cap amounted to age discrimination.
The updated guidance specifies that, since the cap has been disapplied, it should not be used when calculating compensation in section 143, s152, s156 or s158 valuations.
With respect to Hampshire and Bauer, the PPF said the judgements could give rise to additional PPF compensation.
“A scheme only transfers to the PPF if its s143, s152 or s158 valuation shows that it’s underfunded, so it’s important to establish whether the impact from these judgments would move the valuation from an overfunded to an underfunded position,” it explained.
A new information note “clarifies how this should be done, with the accuracy of the approach dependent on the scheme’s funding position before making any such allowances.”
It continued: “The updated s179 valuation guidance confirms our previous interim position that no allowance needs to be made for the impacts of the Hampshire or Bauer judgments. This is because s179 valuations are used primarily to distribute levies among the schemes in our universe, which necessarily involves some approximations.”
“We’ve taken a proportionate approach and consider that the additional burden on the industry to calculate the impact of these judgments would not be justified by the relatively modest redistribution of levy likely to result.”
