Block Transfer Certificates

Cymraeg

Block transfer certificates

Our approach to block transfers for the 2008/09 levy year:

In a scheme’s 2008/09 pension protection levy calculation, we may take account of material transfers into or out of the scheme since the most recent valuation, and up to and including 31 March 2008.

This will ensure that the levy calculated in respect of a particular scheme most accurately reflects the actual underfunding risk posed by that scheme.

A material transfer is deemed to be either:

a) A transfer of more than 5% of the asset value of either scheme as defined in the last MFR or section 179 valuation prior to the first transfer; or

b) A transfer of at least £1.5million.

To take account of such transfers we will require that accurate funding information be provided to the Board voluntarily in one of three ways:

By submission of a Section 179 valuation as part of your next Scheme Return;
By submission of a formal “Section 179 valuation certificate” based on the funding position of the scheme post transfer by midnight at the end of 31 March 2008;
By submission of a two-part “Certificate of valuation results on a section 179 basis following a material transfer” by midnight at the end of 7 April 2008.

The second certificate requires both parties to transfer (unless the transfer out is to an insurance company) to provide an assessment of the scheme’s assets and liabilities under a section 179 basis following that transfer. If the Board receives only one part of the certificate, no levy adjustment will be made.

Part A and Part B of the certificate must be submitted jointly to the Board, either scanned and submitted by email to schemeinfo@ppf.gsi.gov.uk, or posted to the address below and marked for the attention of the Director of Levy and Policy – re Block Transfer.

Director of Levy and Policy – re Block Transfer
Pension Protection Fund
Knolly’s House
17 Addiscombe Road
Croydon
Surrey
CRO 6SR

Where a scheme has participated in more than one block transfer, a separate certificate should be submitted for each transfer. However, provided an effective date after all the transfers is chosen, the same assessment of assets and liabilities can be used for each certificate. Where two or more certificates are provided with different effective dates, the assessment with the most recent effective date will be used in the levy calculation.

The “section 179 valuation certificate” and the two-part “Certificate of valuation results on a section 179 basis following a material transfer” are currently available on the PPF website.

If these approaches are not taken, we will calculate the levy based on the most recent valuation information available pre transfer (scheme return or s179 certificate).

Please note that the Board of the Pension Protection Fund has the right under section 191 of the 2005 Pensions Act to require trustees to provide us with information. Such a power might be used in the context of seeking information about block transfers where we have not received voluntary notification but where, for example, the Pension Regulator informs us that a transfer has taken place.

Frequently asked questions - Block Transfers

(updated 13/3/08)

How can I ensure that deficit reductions made to a scheme that has undergone a block transfer are appropriately reflected?
There are two options. Either by carrying out the assessment of assets and liabilities on a s179 basis at an effective date after the deficit contribution, or if the assessment is carried out at an earlier date, then have the actuary fill in an actuarial certificate for deficit reduction contributions, reflecting only those contributions that occurred after the effective date of the assessment reported in the block transfer certificate. It is acceptable for the valuation referred to in the actuarial certificates to be the block transfer assessment, rather than a formal valuation.

We are only obliged to take into account block transfers and deficit reductions certified to us by 7 April 2008. Please note the deadline for block transfers is earlier than for previous years. Please see below regarding block transfers close to the deadline date

What can I do if my scheme is completing a transfer/merger in March 2008 and will not be able to complete the block transfer certificate?
The Determination gives us discretion to accept later block transfer information in certain circumstances. We propose to exercise that discretion where the certificate is supplied within 3 months of the legally effective date of the transfer and the scheme notifies us of their situation (to schemeinfo@ppf.gsi.gov.uk ) on or before the 7 April deadline

What happens if, following a block transfer, one of the schemes does not complete its part of the block transfer certificate?
To be taken into account for levy purposes, a block transfer certificate must be completed by both parties. The PPF however retains the discretion to seek further information from any schemes where it believes a scheme’s failure to supply information may lead to an unfairly low levy.

I submitted a block transfer certificate that was taken into account for the scheme’s 2007/08 levy. I have not submitted an updated valuation for the 2008/09 levy year. Will the certificate I submitted for the 2007/08 levy be taken into account for the 2008/09 levy?
No, for the 2008/09 levy we will only accept block transfer certificates completed in line with our 2008/09 guidelines as published on our website.

Since the effective date of the most recent valuation submitted to the PPF, the scheme has participated in a number of transfers. In aggregate the transfers exceed the lesser of £1.5M and 5 per cent of the value of scheme assets, although no single transfer is large enough to be classed as material for the purposes of submitting a block transfer certificate. How can I ensure that the transfers are appropriately reflected in the 2008/09 levy?
For the 2008/09 levy year, a block transfer certificate may only be submitted in respect of a material transfer. Where no such transfer has taken place, the only option would be to submit the result of a formal section 179 valuation carried out after the transfers have taken place. The deadline for submission of a section 179 valuation certificate to be taken into account for the 2008/09 levy year is midnight on 31 March 2008.

When filling in a block transfer certificate, what information do I enter in the section entitled ‘Valuation details’?
You should enter the liability and asset information of the relevant scheme AFTER the transfer has taken place. For part B of the certificates, you should reflect the funding position of the entire scheme after the transfer has been made (i.e. you should not just include details of the transferring assets and liabilities).

As noted on the certificates, the valuation should be carried out in the same way as for a normal section 179 valuation, and in particular should comply with the Pension Protection Fund (Valuation) Regulations 2005 and with guidance issued by the Pension Protection Fund. The two exceptions are that you do not require audited accounts for a block transfer certificate, and that the physical transfer of the assets need not have been completed.

For a block transfer certificate, what effective date should I use in the section entitled ‘Valuation Details’?
The effective date needs to fall on or after the date of transfer. For these purposes the date of transfer is the date that the transfer is legally effective. Please note that the requirement set out in regulation 7(1) of the Pension Protection Fund (Valuation) Regulations 2005 for the trustees to have “received the assets of the full amount” by the effective date does not apply. The same effective date must be used to assess the assets and liabilities, but the effective date on part A of the certificate need not be the same as that on part B of the certificate.