Issued: 19 September 2005
'Multi-employer schemes could lose £millions if they don’t act now: the default calculation for the PPF's risk-based levy will almost certainly lead to huge windfall gains for the Regulator' warns Stephen Nichols of the £2.5bn Pensions Trust.
The proposed transitional arrangements are based upon insolvency risk of the scheme's largest employer. If that employer is not assessed to be in the lowest risk band then multi-employer schemes could be paying anything from four to 115 times over the odds.
The reason is down to simple mathematics, on a last man standing approach it only takes four or more employers in the highest risk band (risk band 10) to have a combined probability of insolvency well within the lowest risk band (risk band one).
To avoid the default calculation Nichols urges multi-employer schemes to contact the Regulator and to opt for full assessment. You will need to act quickly to get your full submissions in before the 31 December 2005 deadline.
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