Don’t fail to check out your score

Aug 12 2008 by Asmah Baig, The Journal

THE Pension Protection Fund (PPF) provides protection for members of defined and hybrid pension schemes by paying compensation should the employer become insolvent and the scheme is underfunded. The PPF is funded by a levy on salary-related schemes.

The Pension Protection Levy has two elements to it:

• The scheme-based levy

• The risk-based levy.

At least 80% of the PPF levy must be risk-based. A number of factors are taken into account in the calculation of the risk-based levy, the main one being the risk of the sponsoring employer’s insolvency, ie, the Failure Score.

The Failure Score is measured for the PPF by Dun and Bradstreet on company information sent to them.

The Failure Score calculated by Dun and Bradstreet as at March 31, 2008, is sent to the PPF which will use that score for the levy years 2008/09 and 2009/10. Therefore, if the sponsoring employer has a good trading year followed by a bad one or vice versa, the Failure Score as at the March 31, 2008, will still be used for the next two levy years.

Employers can now obtain their Failure Score for the levy year free of charge by contacting Dun and Bradstreet on (0870) 850-6209.

The only instance when the Failure Score would now change would be if a company identified that incorrect or out-of-date information had been used by Dun and Bradstreet in calculating the Failure Score before March 31, 2008.

It is crucial you are confident that Dun and Bradstreet have taken into account all material information.

We have recently been involved in an appeal where Dun and Bradstreet did not take into account relevant company information. The appeal was upheld and the Failure Score was amended to reflect the most up-to- date company information, saving the employer several hundred thousand pounds.

It would be wise to raise queries before your levy invoice is issued (invoices for 2008/2009 have yet to be issued). Once the invoice has been issued, you will only have 28 days to raise an appeal.

If you require any further information, contact Asmah Baig on 0191 279 9775 or email asmah.baig@dickinson-dees.com