Defined Benefit  

PPF sets end date for Carillion assessments

PPF sets end date for Carillion assessments

The Pensions Protection Fund (PPF) is expecting to conclude the assessment of the majority of the 13 Carillion defined benefit (DB) schemes by the end of 2019.

At the end of this process, the pensions lifeboat will be able to determine which schemes from the collapsed contractor it will need to take on board and which ones have sufficient assets to be able to pay benefits to its members.

In a letter to the chairman of the Work and Pensions select committee, independent Labour MP Frank Field, the PPF chief executive, Oliver Morley, wrote all 13 schemes have completed the initial stages of the assessment process.

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He said: "We have validated each scheme; appointed specialist trustees and advisers familiar with the PPF assessment process to assist with the administrative, legal, audit and actuarial requirements; and drafted and agreed project plans for each scheme, including indicative target transfer dates."

Mr Morley said the lifeboat’s target was to conclude the assessment process for all the schemes within 24 months of the start of the assessment period.  

"If fulfilled, this would be a considerable feat given the complexity and scale of the challenge posed by the Carillion schemes," he added.

Carillion had 13 final salary plans in the UK with more than 28,500 members, and an aggregate deficit for PPF purposes of around £800m.

After unsuccessful talks with its lenders and the UK government, Carillion made an application in January 2018 to the High Court for compulsory liquidation. Soon after it was announced the pension schemes would enter PPF assessment.

The pensions lifeboat estimated in April that its membership will increase by 52 per cent by 2020/21 compared with current levels, mainly due to the Carillion and British Steel cases.

By 2020/21, the PPF is expecting to have 381,000 members, 86,000 more than the previous year.

According to its strategic plan, the lifeboat has assumed that 39,000 members from the British Steel Pension Scheme (BSPS) and 27,000 members from Carillion will enter in 2020/21 and that it will receive £2.5bn and £2.0bn in assets from these plans, respectively.