1 PPF – S179 FINANCIAL ASSUMPTIONS (A4 & A3) A4 is applicable from 31 March 2008. A3 assumptions were applicable up to 30 March 2008, and are shown in bold italics. Yield A = 50% of the sum of the FTSE Actuaries’ Government Securities Index-Linked annualised Real Yields over 15 years assuming: a) 5% inflation; and b) 0% Inflation. Yield B = annualised yield on the FTSE Actuaries’ Government 20- year Fixed Interest Index. Yield C = annualised yield on the FTSE Actuaries’ Government 10- year Fixed Interest Index. Yield D = 50% of the sum of the FTSE Actuaries’ Government Securities Index-Linked annualised Real Yields over 5 years assuming: a) 5% inflation; and b) 0% Inflation. Yield in deferment Compensation increasing in deferment: Adjusted net index-linked gilt yield = Yield A – 0.4% (-0.7%) Compensation not increasing in deferment: Adjusted gilt yield = Yield B – 0.2% Yield in payment Pensions with no increases in payment: Yield = Yield C + 0.3% (+0.0%) Pensions increasing in payment: Adj yield = max of (Yield D – 0.2% (-0.5%)) and (Yield C – 2.2% (-2.5%)) For any dates where yields are not available the yields for the nearest preceding date should be used. Yields should be calculated to the nearest 0.01%. Source –www.pensionprotectionfund.org.uk – Guidance on assumptions to use when undertaking a valuation in date ILG15 yr0% ILG15 yr5% ILG5 yr0% ILG5 yr5% FIG20 yr FIG 10y r Yield A (%) Yield B (%) Yield C (%) Yield D (%) Yield in deferment Yield in payment Non- reval Reval Inc non-inc 30/03/07 1.29 1.18 1.55 1.38 N/A 4.9 8 1.24 N/A 5.04 1.47 N/A 0.54% 2.54% 5.04% 05/04/07 1.32 1.21 1.58 1.41 N/A 5.0 1 1.27 N/A 5.07 1.50 N/A 0.57% 2.57% 5.07% 29/06/07 1.51 1.40 1.84 1.67 N/A 5.4 9 1.46 N/A 5.57 1.76 N/A 0.76% 3.07% 5.57% 28/09/07 1.25 1.14 1.49 1.33 N/A 5.0 1 1.20 N/A 5.07 1.41 N/A 0.50% 2.57% 5.07% 01/10/07 1.24 1.14 1.48 1.31 N/A 4.9 9 1.19 N/A 5.05 1.40 N/A 0.49% 2.55% 5.05% 31/12/07 0.95 0.85 1.16 1.00 N/A 4.5 3 0.90 N/A 4.58 1.08 N/A 0.20% 2.08% 4.58% 31/03/08 0.88 0.78 0.96 0.81 4.52 4.3 6 0.83 4.57 4.41 0.89 4.37% 0.43% 2.21% 4.71% To print the calendar updates so that they can be attached to the back of your current calendar, go into the Print Properties menu, set Orientation to Landscape and Pages per Sheet to 2. The printouts should then be the correct size!
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U = [1.21 (1.05) x PPF liability – assets] if less than 120% (104%) funded.
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PPF – S179 FINANCIAL ASSUMPTIONS (A4 & A3)A4 is applicable from 31 March 2008.
A3 assumptions were applicable up to 30 March 2008, and are shown in bold italics.Yield A = 50% of the sum of the FTSE Actuaries’ Government Securities Index-Linked annualised Real Yields over 15 years assuming: a) 5% inflation; and b) 0% Inflation.Yield B = annualised yield on the FTSE Actuaries’ Government 20-year Fixed Interest Index.Yield C = annualised yield on the FTSE Actuaries’ Government 10-year Fixed Interest Index.Yield D = 50% of the sum of the FTSE Actuaries’ Government Securities Index-Linked annualised Real Yields over 5 years assuming: a) 5% inflation; and b) 0% Inflation.
Yield in defermentCompensation increasing in deferment: Adjusted net index-linked gilt yield = Yield A – 0.4% (-0.7%)Compensation not increasing in deferment: Adjusted gilt yield = Yield B – 0.2%
Yield in paymentPensions with no increases in payment: Yield = Yield C + 0.3% (+0.0%)Pensions increasing in payment: Adj yield = max of (Yield D – 0.2% (-0.5%)) and (Yield C – 2.2% (-2.5%))
For any dates where yields are not available the yields for the nearest preceding date should be used. Yields should be calculated to the nearest 0.01%.Source –www.pensionprotectionfund.org.uk – Guidance on assumptions to use when undertaking a valuation in accordance with Section 179 of the Pensions Act 2004
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Compiled from data from National Statistics Index based on January 1987 = 100.0
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PENSION PROTECTION LEVY (PPL)The PPL is paid by eligible schemes is calculated annually and comprises a risk-based levy and a scheme-based levy. The levy year starts on 1st April.
Calculation of risk-based levy for 2008/09 (2007/08 shown in bold italics)
Levy =min (U x P x R x c , PPF liability x k%)• where U is the underfunding risk for the scheme;• P is the insolvency probability;• R is the proportion of the PPL that is risk-based (80%)• c = levy scaling factor = 3.77 (2.47)• k= cap on risk-based levy = 1% (1.25%)
•P is calculated with reference to a failure score between 1 and 100 assigned to the sponsoring employer, calculated by Dun & Bradstreet UK Ltd. (www.dnb.com/uk ) •D&B’s PPF helpline number is 0870 8506209
Calculation of scheme-based levy
Levy = L x h • where L = the amount of the scheme’s protected liabilities• h = 0.0165% for 2008/09 (0.016% for 07/08) Total PPL = risk-based levy + scheme-based levy
•U = [1.21 (1.05) x PPF liability – assets] if less than 120% (104%) funded.• U = PPF liability x u, if funding position ≥ 120% (104%), where u is set out in the table on the right:
Probability of insolvency based on D&B failure score
A = D&B failure score B = Probability of insolvency (%)
•There are additional rules for calculating the PPL for multi-employer schemes.•Full notes on calculation of value of assets can be found on the PPF website. Source: www.pensionprotectionfund.org.uk
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PPF CAP AND CASH CONVERSION FACTORS
Annualised pension value
for each £1,000 of lump sum
Annualised
pension value for each £1,000 of
lump sumAge Pre97 Post97 Age Pre97 Post9716 47.22 26.76 44 52.36 34.0817 47.30 26.91 45 52.74 34.5518 47.38 27.06 46 53.14 35.0419 47.47 27.22 47 53.58 35.5520 47.56 27.38 48 54.04 36.0921 47.66 27.56 49 54.53 36.6522 47.77 27.73 50 55.05 37.2523 47.88 27.92 51 55.61 37.8824 47.99 28.11 52 56.20 38.5525 48.11 28.30 53 56.83 39.2526 48.24 28.51 54 57.50 40.0027 48.38 28.72 55 58.22 40.7828 48.52 28.94 56 58.99 41.6229 48.67 29.17 57 59.81 42.5030 48.83 29.41 58 60.68 43.4331 49.00 29.66 59 61.62 44.4332 49.18 29.92 60 62.62 45.4833 49.37 30.19 61 63.68 46.6034 49.57 30.47 62 64.82 47.7935 49.78 30.76 63 66.04 49.0636 50.00 31.07 64 67.35 50.4137 50.24 31.39 65 68.75 51.8538 50.49 31.72 66 70.25 53.3839 50.76 32.07 67 71.86 55.0340 51.04 32.44 68 73.60 56.7941 51.34 32.82 69 75.46 58.6842 51.66 33.22 70 77.48 60.7143 52.00 33.64Notes:•These factors do NOT apply to lump sums resulting from commutation of pension•Factors are shown for age exact at date of retirement•For intermediate ages (determined in complete years and days), factors should be obtained by linear interpolation•These factors will be reviewed from time to time and may be changed without notice•Based on Version 2 (September 2006)
Notes:•These factors are the age specific cap factors to be used to adjust the compensation cap•The same factors should be used for S143 and S179 valuations•These factors will be reviewed from time to time and may be changed without notice•Based on Version 7 (April 2008) Source:www.pensionprotectionfund.org.uk
Compensation Cap factors and levels Derived cap Derived cap