21.This Part sets out the functions of the Board of the PPF. The main aim of the PPF is to provide protection for members of defined benefit and hybrid schemes. It will compensate members of such schemes should the employer become insolvent and leave the pension scheme under-funded. It will also assume the functions of the existing PCB.
22.Scheme members will become eligible for compensation when the sponsoring employer is insolvent (and there is no hope of corporate rescue or business rescue with the pensions liabilities attached), and the pension scheme has insufficient assets to buy out the PPF level of benefits. Existing pensioners (with some exceptions) will receive 100% of the pension actually in payment, while deferred pensioners (those below the Normal Pension Age) will receive 90% subject to a cap, calculated using a combination of individuals’ scheme rules and PPF standardised rules.
23.Compensation will provide for survivors’ benefits, and for indexation on rights accrued after 1997, in line with the rate of increase in the Retail Prices Index (RPI), capped at 2.5%, and all deferred rights revalued in line with the increase in RPI capped at 5% from the assessment date.
24.There will be a compulsory annual levy on all defined benefit and hybrid schemes (collected by the Regulator). The levy will consist of an administration levy, a fraud compensation levy and pension protection levies (to be calculated on the basis of both scheme features and risk-based factors in the long-term, though initially only on scheme features).
25.There will be a procedure for dealing with disputes of facts and law regarding PPF decisions and issues of maladministration. This will include internal dispute resolution procedures followed by referral to the PPF Ombudsman, a new office created to deal with PPF disputes.
26.Chapter 1 makes provision relating to the functions of the Board of the PPF and provides for the administration levy.
27.Chapter 2 makes provision relating to action to be taken in relation to insolvency events.
28.Chapter 3 makes detailed provision relating to the operation of the PPF, the pension protection levies and the circumstances in which the Board of the PPF will assume responsibility for a scheme.
29.Chapter 4 makes provision for fraud compensation payments to be made to a scheme where the value of the assets of the scheme have been reduced due to an act or omission constituting a prescribed offence and the employer is unlikely to continue as a going concern.
30.Chapter 5 provides for powers to gather and disclose information, including powers to enter premises etc.
31.Chapter 6 provides for dealing with reviews of decisions of the Board, including reference to the PPF Ombudsman etc.
32.Chapter 7 makes miscellaneous provision relating to the PPF including the discharge of pension sharing orders.