The Pension Protection Fund has published a consultation document proposing changes to the actuarial assumptions used in s179 and s143 valuations.

By law, the PPF has to set its valuation assumptions to reflect pricing in the bulk annuity market.

Section 143 valuations are used to determine whether a scheme should enter the PPF following an insolvency event and Section 179 valuations are used to calculate scheme underfunding to determine the risk-based pension protection levy that a scheme should pay.

The most significant proposed changes are; the use of separate discount rates for pensioners and non-pensioners post retirement; to use yield indices that have durations that better match average liability durations, including the introduction of a new index-linked gilt yield; and to update the mortality assumptions.

There would also be consequential changes to valuations carried out under sections 152, 156 and 158.

The intention is to introduce the changes by 1 December 2016. The consultation will be open until 31 October 2016 and the document can be viewed here.

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