Adding value for the PPF

by Julie-Anne Jones   •  

It’s fair to say that the Pension Protection Fund (PPF) has had a major part to play in the history of Spence. The PPF was set up in 2005 as a safety net for eligible defined benefit pension schemes where the employer becomes insolvent. In 2006, Spence was involved in the first scheme transfer - Chilton Scotland. With the PPF in its infancy, there were no processes or procedures in place, which meant that we worked very closely with them to successfully transition Chilton Scotland through the assessment period.

Over the years, we’ve retained that close relationship with the PPF and endeavoured to reflect their values in the way we work. At all times we aim to do right by our members, by working collaboratively, taking responsibility, acting with respect and aiming for excellence. When the PPF first decided to establish specialist Panels to help them with their work, Spence was successfully appointed. We’ve since been selected to sit on all the PPF’s Actuarial and Administration Panels.

As a member of the Specialist Administration and Actuarial Services Panel (SAASP), we’re one of only four companies appointed to carry out assessment period work for all schemes that enter the PPF.

As well as day-to-day scheme administration, such as processing member benefits, treasury management, payroll and accounts, we undertake specialist PPF tasks including data and benefit rectification, GMP Equalisation and Section 143 Valuations. So, the work we do, even for small schemes, can be significant.

Continuous improvement

We have come a long way since Chilton Scotland. To date, we’ve worked with the PPF on over 150 schemes in the assessment period, including some high-profile cases.

As you would imagine, there are now multiple requirements and processes in place to ensure the best outcome for all parties involved in PPF assessment. These requirements and processes are continually evolving and improving, either through necessity, due to legislative requirements, or to improve the experience for the PPF and their members.

As a result, in addition to our role fulfilling contractual requirements to the PPF, we also provide additional ‘Value Added’ work in a number of areas.


One such example relates to the Hampshire judgment, where we worked with the PPF to develop guidance on the calculation methodology and led the pilot exercise for the recalculation of members’ benefits.
We were subsequently selected to carry out calculation work for members that have transferred to the PPF and the Financial Assistance Scheme. So far, we’ve delivered revised compensation and back payment calculations for over 300 members.

The Hampshire judgment also has an impact on schemes currently in PPF assessment, which resulted in us having to review and update member communications and reports, and change the data requirements for our data audit process. Our Actuarial team also had to develop a system for assessing the potential impact of Hampshire on schemes in PPF assessment.

Depending on the outcome of court appeals by DWP and the PPF following the Hughes judgment, there may yet be more work to do in this area.

Contingency planning

In recent years, the PPF has focused attention on contingency planning for schemes that are known to be transitioning into the assessment period, even though the employer has yet to be declared insolvent. For Spence, being involved with a scheme before it officially enters the PPF means we can really hit the ground running and do much of the take-on work in advance.

Prior to a sponsor going insolvent, scheme trustees need to assess and manage risks related to the payment of pensions, so that these can continue to be paid, particularly if the scheme bank account is in the sponsor’s name. We have mitigated this risk by setting up client accounts that can be used immediately for a scheme, rather than having to wait on the trustee bank account being set up. In addition, the Spence board has agreed to provide a short-term loan facility to pay pensions if required.

Although we’ve yet to use the loan facility, the client accounts have already proved to be very useful. We were able to pay the pensioners of one scheme in July, even though we were only appointed in late June.

Member experience

Reflecting the PPF’s own values and mission, at the heart of all our work is our determination to ensure members receive the best possible service, and we can make the right payment to the right member at the right time. We work continuously with the PPF to improve our processes for members.

During 2020, we introduced a new member portal for schemes in the PPF assessment period, designed in line with PPF requirements and branding. This has greatly improved online member communications and access to payroll, particularly during the current pandemic. We also developed and implemented a new process to facilitate online identity verification (to replace the need for sending hard-copy certificates), which helped speed up member transactions during lockdown.

We are very proud of all the work we do with the PPF, the value we add, and the difference this makes to the lives of the many thousands of members they protect and pay pension benefits.

Further reading

Government spending in response to Covid-19

by James Sweetnam   •  

Adding value for the PPF

by Julie-Anne Jones   •  

Lessons learned

by John Wilson   •  

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