THE PENSION PROTECTION FUND is to clarify the way schemes should value property as a contingent asset, in the wake of an ombudsman ruling against it.
At the end of July, The PPF ombudsman ruled in favour of the NASUWT Managed Pension Plan, which sought to use a conference centre as a contingent asset to reduce its levy payments in 2009, Accountancy Age’s sister publication Professional Pensions reports.
The PPF originally rejected the centre as a contingent asset because it felt the trustees had used the wrong property valuation – assessing it on a market value basis rather than a vacant possession basis – and charged a higher levy accordingly.
After the trustees of the NASUWT scheme requested a review of the levies, the PPF and the PPF Reconsideration Committee looked into the original decision but upheld the calculation of the levy. Following this, the trustees appealed to the PPF ombudsman.
However, the deputy Pension Protection Fund ombudsman Jane Ervine ruled the PPF’s reasoning had been “unclear”, “inadequate” and the legal opinion “inconsistent”.
She said the PPF board’s approach did not match the valuation guidance issued for the 2009/10 levy year and told it to reconsider the case.
A PPF spokeswoman said it would be inappropriate to comment before the PPF board had reached a new decision, but noted the fund was planning to clarify its guidance as a result of the ruling.
She said: “We are planning to make some changes to the contingent asset guidance to clarify the basis on which we expect charges over property to be valued for pension protection levy purposes.”
LCP head of pensions research David Everett said the case represented one of only a few occasions where the PPF has been asked to reconsider by the ombudsman.
He said: “The interesting thing about this case is it’s one where there’s a genuine dispute about the right way of valuing an asset.”
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