Contingent Asset Certificates

Cymraeg

Contingent Asset Certificates

We will recognise the following types of contingent assets in the levy calculation for 2009/10:

Guarantees given by parent/group companies and undertakings (Type A)
Security over cash, real estate and securities (Type B)
Letters of credit and bank guarantees (Type C)

Details of how the Board will treat contingent assets for the purposes of the pension protection levy for 2009/10 are set out in the Board’s determination under section 175(5) of the Pensions Act 2004 which was published on 20 November 2008.

The contents of the contingent asset certificates have been incorporated into the draft determination as Annex C, to support certification via Exchange.

Please note that schemes will no longer receive contingent asset recertification reminders from the PPF. The requirements for recertification have also been incorporated into the draft determination and will be supported by Exchange.

Certain acceptability criteria are in place for each form of contingent asset, in order to protect the Pension Protection Fund and levy payers against enforceability and valuation risks. In particular, a standard certificate must be completed in relation to each contingent asset arrangement for it to be recognised for levy purposes. Each certificate also has accompanying notes which should be read before completion.

Contingent Asset Guidance (published November 2008)

Contingent Asset agreements

Standard form agreements can be accessed via the following links (note these docs have been the same since 2007/08)
Pension Protection Fund required form of Type A contingent asset - group company guarantee
Pension Protection Fund required form of Type B(i) contingent asset - security over cash
Pension Protection Fund required form of Type B(ii)EW contingent asset - security over real estate (England & Wales)
Pension Protection Fund required form of Type B(ii)S contingent asset - security over real estate (Scotland)
Pension Protection Fund required form of Type B(ii)NI contingent asset - security over real estate (Northern Ireland)
Pension Protection Fund required form of Type B(iii) contingent asset - security over securities
Pension Protection Fund required form of Type C(i) contingent asset - letter of credit/bank guarantee (evergreen)
Pension Protection Fund required form of Type C(ii) contingent asset - letter of credit/bank guarantee (reducing balance)

IMPORTANT NOTE ON STANDARD DOCUMENTS: It is the user’s responsibility to obtain legal advice before using the Pension Protection Fund’s standard documentation – you should not rely on the guidance note or on other documentation published by the Pension Protection Fund. The Board accepts no responsibility to trustees/managers or any other person for the efficacy of the standard documentation or for any legal effects that such documentation may have if used in any circumstances.