The Pension Protection Fund (PPF) has taken the unprecedented step of overruling appeals that have already been deemed successful, and is now systematically overcharging companies to the tune of millions of pounds on their levy payments, warns Aon Consulting.
Aon has learned that a number of companies with large deficits have been sent letters by the PPF in the past few days informing them that it is overruling dozens of appeals which had previously been approved by the PPF's appointed advisers on the issue, Dun & Bradstreet (D&B). This means companies now face additional levies of millions of pounds.
The appeals were on the basis that the system of 'failure scores' was devised when pension scheme deficits were not shown on company balance sheets, and so should continue to be applied in the way it was designed. D&B approved those appeals and agreed to advise the PPF of the new scores.
Paul McGlone, principal & actuary at Aon Consulting said: The PPF is effectively ignoring the advice of its own appointed experts in insolvency risk. The fact that the appeals were successful in the first place clearly suggests that D&B believe the appeals to be reasonable. The PPF has effectively misled these companies about their levy and therefore denied them the opportunity to consider other actions to reduce it.
This decision will undermine confidence in the PPF. In particular, there are two questions the PPF needs to answer: Why did it take them so many months to discover the restrictions in their own legislation? Do they agree with D&B that the methodology they are using overstates the risks for these companies, and what are they doing to try to correct that?
PPF overcharging companies to the tune of ₤millions
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