Invoicing 2007/08 FAQs
(FAQs on 2007/08 Section179 valuations are also available)
(FAQs on D&B's methodology are also available)
Invoicing - General
When will I receive my 2007/08 levy invoice? In advance, please can I have an indication of the amount of the levy?
The Pension Protection Fund will begin issuing 2007/08 pension protection levy invoices from October 2007.
We will initially be issuing an estimated 600 pension protection levy invoices per week, so schemes may not receive their invoices for some months.
Unfortunately, we are not able to advise schemes of the amount due in respect of the pension protection levy until we issue the scheme with an invoice. This is because we do not have complete, accurate data for all schemes at present. Moreover, the final levy calculation for a scheme occurs at the point an invoice is issued, so changes to the levy amount may occur up to that point.
I have received my levy invoice but have since lost it. Please can you send me a copy of the invoice?
Yes we can send you a copy of the invoice. Please provide your full scheme name and your SSID (Scheme/Section IDentifier), if available, to help us locate your invoice.
Can I have extra copies of the levy booklet accompanying the invoice?
"A Guide to the Pension Protection Levy 2007/08" can be viewed on this website. If you would like more hard copies, these can be ordered by phone or email: Telephone: 020 8867 3297. Email: pensionprotectionfund@ecgroup.uk.com, quoting reference PPF0707.
I thought the RBL calculation was a combination of U and P: the formula shown on my invoice is just 0.0125 * L – why?
The risk based element of the pension protection levy is subject to a levy cap of 1.25% of estimated liabilities on a section 179 basis. Where the risk based levy calculated using the formula RBL = U x P x Levy Scaling Factor x Percentage risk based exceeds 1.25% of estimated section 179 liabilities, the cap will apply and the risk based levy will be re-calculated using RBL = 0.0125 X L.
How will the Pension Protection Fund administration levy be invoiced?
The Pension Protection Fund administration levy will be included on a separate invoice, alongside various other levies (e.g. the Pensions Regulator’s General Levy) issued by the Pensions Regulator. Any queries relating to the PPF Administration Levy should be raised directly with the Regulator.
Does a scheme in an assessment period still have to pay the pension protection and the administration levies?
Yes. Schemes that have entered into an assessment period are necessarily eligible schemes and are therefore liable to pay the associated levies as set out in the Pensions Act 2004. There is no certainty when a scheme enters into an assessment period whether or not the Pension Protection Fund will ultimately assume responsibility for the scheme hence that scheme remains liable to pay the levies.
My scheme is eligible, but is expected to complete wind up during the levy year. Is the scheme still required to pay the Levy?
Schemes in this position do not qualify for a waiver (see waiver section) and should therefore always reserve sufficient monies to pay the levy before completing wind up.
When will you begin invoicing the 2008/09 levy? (added 8/5/08)
We will begin sending out 2008/09 invoices in the early autumn of 2008.
Underfunding Risk
The scheme submitted an s179 voluntary certificate - why is the asset/liability figure based on an MFR valuation?
The PPF will only calculate a scheme’s 2007/08 levy with reference to its MFR valuation if a Section 179 valuation was not received before 5pm on 30 March 2007, or where a section 179 certificate did not meet legislative requirements or the Board’s rules.
The scheme has paid special contributions – why are these not included in the assets?
The deadline for submitting Deficit Reduction Certificates to the Board for inclusion in the 2007/08 levy calculation was 5pm on 5 April 2007. No new information can be accepted after this date.
I do not follow the funding level calculation – please can you explain it?
The scheme funding level is determined as: (total scheme assets/liabilities) x 100.
Total scheme assets take account of any certified special contributions paid into the scheme since the most recent valuation and any type B and C contingent assets.
Liabilities are the estimated liabilities of the scheme on a section179 basis as at 31 October 2006.
Insolvency Risk
Why is my Failure Score “X” and how can I appeal it?
If you just wish to discuss the specific data elements that have been used to determine your 30 March 2007 Failure Score, you should contact D&B’s dedicated Pension Protection Fund helpline on 0870 850 6209, or by emailing customerhelp@dnb.com.
If you then wish to query the data elements included in the calculation of that score, you may request an appeal, up to 28 days after issue of a levy invoice, again by contacting D&B's dedicated UK helpline.
D&B will then undertake a robust appeals process in every case including: stage 1- Data validation; stage 2- Score explanation; and stage 3- Escalation process: if a company still wishes to appeal against its failure score there will be a review through the D&B customer manager, scoring specialist, and finally D&B director. Further information on this appeals process is available in chapter 5 of the Pension Protection Levy Consultation Document August 2007.
How does D&B calculate the insolvency risk for branches of foreign companies registered in the UK?
For the UK branches of foreign companies registered in the UK (identified with an FC prefix on their Companies House Registration number), the Board will use the Failure Score of the foreign company.
Where that Failure Score is not available, the Board will use the average probability of insolvency for the UK sponsoring employers of defined benefit pension schemes within the relevant industry. For example, if the foreign company is a bank, the probability of insolvency for the UK branch will be the average probability of insolvency for all UK banks that sponsor defined benefit pension schemes.
In order to define industry groups, the Board will use the first two digits of the 1972 Standard Industry Classification (SIC) codes. Please note, where a three digit 1972 SIC code is given, it should be preceded by a 0. Therefore, ‘123’ would be ‘0123’ and the Board would require the two digit SIC code ‘01’
How do I obtain my industry average probability of insolvency?
To obtain this information, you will need to provide the employer’s two digit SIC code which can be obtained by contacting D&B’s dedicated Pension Protection Fund helpline on 0870 850 6209, or by emailing customerhelp@dnb.com. You can then obtain a specific employer’s industry average probability of insolvency from the Pension Protection Fund Stakeholder Support Team on 0845 600 2541 or at levyinvoice@ppf.gsi.gov.uk. Please refer to the SIC code when contacting the PPF.
Why are the assumed probabilities of insolvency attached to particular D&B Failure Scores different for every OECD country?
The assumed probabilities of insolvency attached to particular Failure Scores (or local equivalents) differ between OECD countries due to variations in the overall national insolvency rates which are reflected in local scoring models.
I have received an invoice. In the table detailing all the participating employer information, the DUNs number and failure score in respect of one of the employers is blank.
The Failure Score will be blank (and the DUNs may be blank) where a scheme or industry average probability of insolvency score has been used, as per paragraph 34 of the Board’s Determination under section 175(5) of the Pensions Act 2004. In this event, D&B will directly calculate a probability of insolvency for the employer, based on the average probability of insolvency for the relevant employers, and therefore no Failure Score applies.
I have recently received a pension protection levy invoice and I believe that the probability of insolvency provided for a particular employer is the industry average probability of insolvency applied when D&B are unable to calculate an individual score and are unaware of the correct Statutory Industry Classification (SIC) code for that employer. How can I query that probability?
If D&B has been unable to calculate an individual Failure Score for a particular employer and has also been unable to determine the relevant SIC code that should be applied to that employer, the industry average probability of insolvency for all employers with an unknown SIC code will be assigned.
If a scheme wishes to seek an amendment of that insolvency probability, the scheme should provide D&B with the correct SIC code for that employer, either by emailing customerhelp@dnb.com, or by calling the dedicated D&B helpline for PPF related queries on 0870 850 6209.
Contingent Assets
How is the discount factor, z, calculated?
The discount factor z is equal to:
1 – (probability of insolvency of the guarantor/probability of insolvency of the sponsoring employer(s))
A Type A contingent asset affects the risk based levy calculation by substituting the insolvency risk of the guarantor for that of the sponsoring employer(s) for the part of the deficit guaranteed. This is achieved by applying this “z” factor to the deemed value of the type A contingent asset.
Why does the funding level calculation not take account of my Type A guarantee?
Type B and C contingent assets affect the levy calculation by increasing the scheme funding level. A Type A contingent asset however, affects the risk based levy calculation by substituting the insolvency risk of the guarantor for that of the sponsoring employer(s) for the part of the deficit guaranteed, therefore the Type A contingent asset should not be taken into account in the calculation of the scheme’s funding level.
How is the Type A contingent asset taken account of in the levy calculation?
A Type A contingent asset affects the risk based levy calculation by substituting the insolvency risk of the guarantor for that of the sponsoring employer(s) for the part of the deficit guaranteed. This is achieved by applying the discount factor ‘z’ to the deemed value of the Type A contingent asset in the formula for determining total scheme assets: A = S + C + (N x z). The discount factor z is equal to 1- (probability of insolvency of guarantor/probability of insolvency of sponsoring employer(s)).
I have put a Type A contingent asset in place, the probability of insolvency of the guarantor company now exceeds that of the sponsoring employer, does this mean that the guarantee has had a negative effect on the levy calculation?
For the purposes of the risk based levy for 2007/08, the Board will look at the assumed insolvency probabilities (based on D&B data) for both the guarantor (A) and the sponsoring employer(s) (B) on 30 March 2007. If on that date the insolvency probability of B is higher than that of A, then the guarantee will be taken into account and will result in a reduction in the levy in accordance with the formulae set out in the levy determination. If, however, on that date the insolvency probability of the guarantor A is actually higher than that of employer B, then the guarantee will be ignored for the purposes of the levy.
NB: A = asset calculation; S = value of scheme assets; C = special contributions (post effective valuation date); N = face value of contingent asset; z = discount factor
Payment Of Levy Invoice
When does the invoice need to be paid?
The invoice should be paid immediately, wherever possible. However, schemes will have 28 days from the invoice date to pay the amount requested before debt collection activity will commence. This invoice date and the payment due date appear on the front of the invoice.
What happens if we refuse to pay on time?
Under section 175 of the Pensions Act 2004, the Board of the Pension Protection Fund is required to raise a pension protection levy.
Under section 181 of the Pensions Act 2004, the trustees of the scheme are required to pay this amount to the Board, and the Board intends that the invoice and the supporting documentation issued with it will enable levy payers to meet their statutory obligations to pay this invoice immediately. If the trustees wish to query the amount of pension protection levy payable by the scheme, they must raise their query within 28 days of the date of this invoice by contacting the Pension Protection Fund using the contact details shown on the invoice. This deadline will be strictly applied.
If no query is raised with the Board within 28 days, the Board will begin debt collection activities. The Board will carry out these debt collection activities rigorously, in ways that are clearly compliant with applicable legislation, and in ways that are consistent with its overall stakeholder management strategy.
What happens if we are unable to pay on time?
Paying the pension protection levy is compulsory and, since payment can be made from scheme assets, all schemes should be able to pay on time. If your scheme is fully insured, please see the final FAQ regarding levy waivers.
As far as affordability is concerned, the Board set a risk based levy cap of 1.25% of the scheme’s estimated liabilities on a section 179 basis as at 31 October 2006. It is expected that this cap will affect 5% of eligible schemes. The Board considers the level of the risk based levy cap to be reasonable taking into account the need for each scheme to maintain appropriate funding levels in addition to paying the annual pension protection levy.
How and to whom do we make payment?
Schemes are strongly encouraged to pay their invoice electronically into the Pension Protection Fund’s bank account, quoting their scheme name and invoice number, using BACS, CHAPS or internet banking. This is the simplest, most secure and effective method helping to reduce administration costs. Full payment instructions will be provided with the invoice.
Will the PPF accept cheques in payment of protection Levy invoices?
If the scheme has no facilities to make electronic payments, then the PPF will accept payment by cheque. Please make your cheque payable to “PPF Levy Collection Account” and forward them together with the remittance slip at the bottom of the levy invoice to:
The Pension Protection Fund,
Knollys House
17 Addiscombe Road
Croydon
Surrey
CR0 6SR.
Have you received my cheque?
The Pension Protection Fund does not routinely provide receipts for cheques. Please in the first instance refer to your bank or bank statement to ascertain if this item has cleared. If this has not occurred within 10 working days of you posting the cheque to the PPF please contact us on 0845 600 2541 or by email at levyinvoice@ppf.gsi.gov.uk
Can trustees recoup the levy costs from members?
The pension protection levy is a liability of the pension scheme trustees. Payment of the levy and the recouping of any costs are the responsibility of the trustees.
Appealing Your Invoice
Can I appeal my Pension Protection Fund Levy?
If the trustees wish to query the amount of pension protection levy payable by the scheme, they must raise their specific query within 28 days of the date of this invoice by contacting the Pension Protection Fund using the contact details shown on the invoice. This 28 day deadline will be strictly applied. Please note that suggesting that you intend to raise a query at a future date because, for example, the invoice is being checked by a scheme advisor, does not constitute a query in its own right.
If no specific query is raised with the Board within 28 days, the Board will begin debt collection activities.
A more formal review process for invoices is also available – further information can be found in “A Guide to the Pension Protection Levy 2007/08”, a copy of which will be included in all levy invoices, and in “How we deal with your concerns”, which can be found in the Complaints and Reviews section of the Pension Protection Fund website.
If an employer wishes to appeal against its Failure Score, the employer should within 28 days of the date of the invoice approach D&B, who have a robust process in place for dealing with appeals (please see FAQ above: “Why is my Failure Score “X” and how can I appeal it?”)
Should I apply for a formal review? (question added 7th Nov 2007)
Queries received by email to levyinvoice@ppf.gsi.gov.uk, telephone and fax will be managed under our informal review process. We are happy to deal with your queries under our informal reviews process as it enables us to answer those queries more quickly and simply. Please note that in calculating the levies, the Board must apply its annual Determination under section 175(5) of the Pensions Act 2004, which is available on the Pension Protection Fund website. The Board has no discretion to depart from this Determination. Where a query cannot be resolved through the informal reviews process, a formal review under the statutory review process (“reviewable matters”) can be requested.
Please note that there are specific statutory requirements to make an application for a review of a reviewable matter including who is entitled to request the review, how the application must be submitted, the information it must contain and the time limits for making the application.
Where a scheme has been dealing with the Board on an informal basis in relation to a levy invoice query, the use of our informal process will not prejudice the availability of the statutory review process. The statutory time limit for requesting a formal review of the calculation of a scheme's levy is 28 days from the date of the relevant levy invoice. This date is stated on your levy invoice.
However, if a formal review is requested after the conclusion of the informal review process, the Board will generally treat the request for review as made within the prescribed period, provided that the informal query was made by the deadline set out on your levy invoice and the review request is received within 28 days of the date of the conclusion of the informal query. If the Board does not receive a request for formal review within that period we will treat the matter as closed.
How do I apply for a formal review? (question added 7th Nov 2007)
Please refer to the leaflet accompanying your levy invoice and our leaflet entitled “How we deal with your concerns” which is available in the guidance section of the Pension Protection Fund website This contains guidance about:
- who is entitled to request a formal review,
- how an application must be submitted,
- the time limits for making an application, and
- what information it must contain.
You will also find on the website an application form to apply for a formal review in respect of a levy invoice.
Please note that the Board of the Pension Protection Fund will not accept applications for the review of a reviewable matter by fax, and will only accept it by email where it is sent to reviews@ppf.gsi.gov.uk. If you are applying by email, you will still need to send a hard copy of your application to Pension Protection Fund and ensure you have complied with all the requirements for a review application including the requirement for the application to be signed.
When can I apply for a review? (question added 7th Nov 2007)
The statutory time limit for requesting a formal review of the calculation of your scheme's levy is 28 days from the date of the levy invoice. This date is stated on your levy invoice.
However, if you have raised an informal query within 28 days of the date of the levy invoice and wish to raise a formal review after the conclusion of that query, the Board will generally treat the request for review as made within the prescribed period provided that it is received within 28 days of the date of the conclusion of the informal review process.
Who can apply for a formal review? (question added 7th Nov 2007)
An application to review the calculation of the amount of the pension protection levies must therefore be made by the trustees of the scheme concerned (or their representative, but only if that representative has been appointed to act on their behalf for the purpose of the review and written notice of that appointment has been given by the trustees to the Board.
This is because regulations provide that certain requirements must be satisfied before the Board will formally review a decision in respect of the calculation of a scheme's pension protection levies following an application. One of those requirements is that the applicant must be made by an “interested party” (as defined in the Pension Protection Fund (Review and Reconsideration of Reviewable Matters) Regulations 2005) and signed by the individual making the application.
Can I apply for a formal review by email? (question added 7th Nov 2007)
Yes. If you wish to send your application in by email you must send it to reviews@ppf.gsi.gov.uk. Please do not send it to any other email address at the Pension Protection Fund. If you are applying by email, you will still need to send a hard copy of you application to Pension Protection Fund and ensure you have complied with all the requirements for a review application including the requirement for the application to be signed.
Please note we do not accept applications for review by fax.
What can I ask to be reviewed? (question added 7th Nov 2007)
In calculating the amount of the levies in respect of a particular scheme, the Board must apply its determination under section 175(5) of the Pensions Act 2004 (the “Determination”) to the relevant facts pertaining to that scheme. The Board has no discretion to depart from the Determination in calculating the amount of the levies. The Determination for the levy year 1 April 2007 – 31 March 2008 is available on the Pension Protection Fund website.
In carrying out a review, it will be considered whether the scheme's levy invoice has been calculated in accordance with the Determination. The formal review process will not review any aspect of the policy underlying the Determination.
The formal review process will not review the assignment of a failure score by Dun & Bradstreet. If you wish to appeal your failure score or insolvency risk indicator, you must contact Dun & Bradstreet as detailed in the information accompanying your levy invoice. Please note that you must also raise any queries with Dun & Bradstreet within 28 days of the date of your invoice (please see FAQ above: “Why is my Failure Score “X” and how can I appeal it?”).
Our scheme received a Pension Protection invoice dated 14th December 2007 and, despite the Christmas period, has only been given the normal 28 days to appeal. Do you feel that this is fair? (question added 17th Dec 2007)
Schemes invoiced on 14th December 2007 should have received an enclosure with the invoice advising that the last date to raise a query has been extended to 18th January 2008, even though the invoice states that it is 11th January 2008.
I have missed the 28 day deadline to raise an informal query because I was away on holiday. Does this count as exceptional circumstances to allow me to raise my query after the deadline? (question added 7th Nov 2007)
Whether a particular situation amounts to exceptional circumstances will be considered on case by case basis. However the Board would not usually consider any of the following to amount to exceptional circumstances: poor scheme management, administrative failure, awaiting a response to a D&B appeal, or the planned absence of trustees or their advisers. Any request to allow the late submission of a query on the grounds of exceptional circumstances should be accompanied by appropriate evidence of those circumstances and must also include details of the specific query being raised. Grounds of exceptional circumstances will not be considered in advance of the specific query being raised.
Please e-mail details of your request, accompanied by appropriate evidence, to levyinvoice@ppf.gsi.gov.uk or write to:
Pension Protection Fund
Knollys House
17 Addiscombe Road
Croydon
Surrey
CR0 6SR.
I have missed the 28 day deadline to apply for a formal review because I was away on holiday. Will the Board still accept my review application even though my application is late? (question added 7th Nov 2007)
Where an application is received more than 28 days after the date of the invoice, the relevant regulations only provide for the Board to consider that application where (i) in the opinion of the Board, it is reasonable for an application to be made after the end of the 28 day period and (ii) the application is received in such further period as the Board considers reasonable. The Board will usually find it reasonable for an application for a formal review to be submitted up to 28 days after the conclusion of an informal query, provided that informal query was itself commenced within 28 days of the invoice. However please note that poor scheme management, administrative failure, awaiting a response to D&B appeal, or the planned absence of trustees or their advisers are not reasons which the Board would normally find reasonable for the application to be delayed. If you are submitting an application for review after the end of the 28 day period, that application should be accompanied by appropriate evidence of the circumstances which you believe may make it reasonable for the application to be made outside the usual 28 day period. The following link will take you the FAQ How do I apply for a formal review?
I have missed the 28 day deadline to appeal to D&B because I was away on holiday. Can I raise my D&B appeal after the deadline? (question added 7th Nov 2007)
You have 28 days to appeal your probability of insolvency with D&B. D&B have been instructed not to accept appeals outside of 28 days past your invoice date. D&B should not be contacted regarding any request for appeal after this 28 day period has elapsed.
However the Board will only deal with informal queries raised after the 28 day deadline where there are exceptional circumstances (see above). The Board will only accept formal review applications after the 28 day deadline as set out above.
Payment Reminder Letters
Why have we received a letter reminding us to pay our scheme’s invoice when a query has been raised with the PPF?
This could simply be a case of our chaser letter crossing with the receipt of your query; however, you should also note that not all queries will warrant us temporarily suspending our credit control activities. Temporary suspension of our credit control activities will only generally occur where the scheme has been able to provide evidence to support one of the following:
- Data we have used in respect of the invoice is incorrect
- The scheme is not eligible for PPF protection
- The scheme is eligible for its 2007/8 Pension Protection Fund levy to be waived
In addition, we will temporarily suspend our credit control activities where we have been informed by D&B that a formal appeal has been raised with them.
Waivers and Eligibility Queries
What is a levy waiver?
The PPF is required to levy all eligible schemes. However, some schemes that are eligible for PPF compensation and so liable to pay a levy pose very little risk to the PPF, or, by the point that they are required to pay the invoice, they pose no risk at all.
Under the Pension Protection Fund (Waiver of Pension Protection Levy and Consequential Amendments) Regulations 2007 the Board has therefore a discretionary power to waive the levy in respect of schemes that fall within a discrete set of prescribed circumstances and pose little or no risk. These schemes may apply to have either their scheme based levy, or risk based levy, or both, waived for the year in question.
The scheme will remain eligible, but no invoice will be payable for the part of the levy being waived that year.
What are the circumstances under which the Board of the PPF has discretion to waive the Levy?
The Regulations in respect of waivers have very strict criteria.
Under the Pension Protection Fund (Waiver of Pension Protection
Levy and Consequential Amendments) Regulations 2007 the Board has discretion to waive the pension protection levy in the following circumstances only:
1. Where the scheme is authorised under section 153 of the Act (closed schemes) to continue as a closed scheme.
2. Where it is satisfied in respect of the scheme that
(a) no further contributions will be paid towards the scheme by or on behalf of members in respect of relevant benefits, and
(b) all relevant benefits which are payable in accordance with each member's entitlement or accrued rights (including pension credit rights within the meaning of section 124(1) of the Pensions Act 1995 (interpretation of Part 1)) under the scheme rules will be provided in full by a policy of insurance or an annuity contract, even when such policies or contracts are held in members names, or by more than one such policy or contract.
3. Where:
(a) the scheme has no active members,
(b) a liquidator has been appointed for the purposes of a voluntary winding up of the company which, immediately before the time at which the scheme ceased to have any active members, was the employer of persons in relevant employment,
(c) the liquidator has sent to the registrar of companies his final account and return under section 94 of the Insolvency Act 1986 (final meeting prior to dissolution), and
(d) it appears to the Board that it is reasonable to expect that the dissolution of the company will take effect on or before 31st December of the financial year to which the proposed waiver relates (but see regulation 7).
The Board will consider using its discretion to waive the levy under circumstances 2 and 3 above. In ALL cases the scheme must supply documentation in support of their application.
What is the difference between applying for a waiver, and being an ineligible scheme?
An ineligible scheme is not eligible to receive PPF compensation should an insolvency event occur in respect of the sponsoring employer(s), and therefore does not need to pay the PPF scheme and risk based levies, which are designed to fund this compensation.
A scheme may apply for a waiver where it is eligible, but poses very little or no risk at all to the PPF, and falls within the prescribed set of circumstances set out in the Pension Protection Fund (Waiver of Pension Protection Levy and Consequential Amendments) Regulations 2007.
A waiver application relates to a single invoice year only – therefore a scheme must reapply for each year it believes it is eligible for a waiver.
When must a waiver application be made?
For the 2007/08 levy year, you need to contact the PPF indicating that you intend to apply for a waiver within 28 days of receipt of your invoice.
Your invoice will contain the final date that you can apply for a waiver. You must make your application for a waiver before you have paid your invoice.
What else do I need to know when applying for a waiver?
You may only apply for a waiver where:
a) Your application is made within 28 days of receipt of your invoice, and
b) You have not yet paid your invoice.
If your application is made more than 28 days after receiving your invoice, OR you have already paid your invoice, the Board will not be able to consider your application.
How do I apply for a waiver?
Contact the PPF Stakeholder Support Team, clearly indicating that you are applying for a Waiver.
Tel 0845 600 2541
Text phone 0845 600 2542
Fax 020 8633 4903
Email levyinvoice@ppf.gsi.gov.uk
What do I need to supply to the PPF in support of my waiver application?
The information you will need to supply in support of your application will depend upon which criteria you are applying under.
You can use the checklist to help you ensure you provide all of the correct information for your waiver category.
The checklist outlines the minimum information required, but it is not exhaustive, and you should always supply as much information as possible to assist the Board in making their decision.
You need to supply documented evidence for each piece of information requested against the criteria you are applying under
Will the Board always use its discretion to waive the levy?
The Board will not always use its discretion to waive the levy. It will decide on an annual basis whether it is prepared to grant levy waivers for that particular year.
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