PA Northern Conference 2019: PPF has spoken to a ‘number’ of high street brands over past 18 months

The Pension Protection Fund has been talking to a number of high street brands about the options available for defined benefit pension schemes over the past 18 months.

Speaking at the Pensions Age Northern Conference last Thursday 13 June, PPF panel manager Helen Beckinsale encouraged schemes to be proactive and prepared for PPF assessment even if it isn’t a real risk.

“In our view, effective risk management and contingency planning are good governance,” she said. She explained that for 70 per cent of claims that the PPF receives, the first sight of the PPF is employer insolvency. For the remaining 30 per cent of claims, the PPF has engaged with trustees prior to the insolvency event, and in some cases that has started 12-18 months before.

“They recognised that the PPF might be an option; it may not be inevitable; we have been talking to a number of high street brands over the past 18 months where the PPF was an option but it wasn’t a real risk. They just want to make sure that they are prepared for every eventually, and that they understand what the risks are and can make the right decisions. Of course, it makes us happy when a scheme doesn’t need us,” she said.

Beckinsale said that the recent collapse of Carillion really did shine a spotlight on DB pensions.

“Before that we’d already seen British Steel, British Home Stores and the story continues with Toys R Us, Johnston Press, and most notably in the press over the past couple of weeks has been the CVA for Arcadia and of course the challenges to the CVAs from Debenhams. They are really interesting times for us and we continue to learn what it means to be in the DB pensions world as we go through.”

She explained that the process of applying to the PPF is not overly time consuming or expensive if it is managed when times are good. “If you are forced to manage the process into the PPF, post insolvency, and in anger, it can become very expensive…we generally welcome interaction from any trustees, and advisers to DB pension schemes that would like to come and talk to us.”

Beckinsale noted that the PPF now has a large number of members, around 250,000, that have gone through assessment. It has paid out around £4.4bn in compensation. Members who end up in the PPF do not often have the choice where they end up, so the PPF tries to make sure that the member experience is as positive as it can be.

The PPF aims for most schemes and members to complete with two years of entering PPF assessment. Until assessment is complete trustees continue to run the schemes, and then the PPF takes over administration once the process is finished.

The PPF has recently published guidance on the assessment process titled Contingency planning for employed insolvency, which is available here.

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