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‘Pension levy breaches fairness principle’

Pension Protection Fund levy proposals will lead to unfair levies and breaches the PPF’s first principle of fairness, says First Actuarial director Alan Smith.

Smith says the proposals will lead to levies that are based on out of date information and will contradict the PPF’s fairness principle that schemes pay levies which reflect the risk they pose.

From 2009/10, the PPF is proposing to bring forward the measurement date of risk factors to 12 months before the start of the levy year in a bid to address concerns that schemes cannot calculate their individual bills until after the start of the levy year in question.

First Actuarial believes that setting the measurement dates for a levy year at the previous October 31 would allow a more up to date risk rating to be used.

But Smith says: “In many cases, the insolvency risk could be based to a significant extent on the financial state of the company nearly three years earlier, contradicting the PPF’s first principle that the levy should reflect the risk posed.

“How many insurers, when they are assessing flood risk for home insurance, ask where a policyholder lived three years ago?

“As it stands, the PPF board have a choice of amending their proposals or abandoning their fairness principle – the two do not sit well together.”


Northern Rock to cut the number of its mortgage products by over two thirds

Northern Rock is set to have its number of products cut by over two thirds in its first product change since its funding crisis.The lender has removed all of its one and a half year fixed rates from its Together and flexible fixed-rates range.Its changes also see it withdraw its three year fixed-rate and variable […]

Equitable update on Pru transfer

Equitable Life is writing to all policyholders to update them on the transfer of its £1.8bn book of with-profits annuity policies to Prudential.Over the next week, around 400,000 policyholders will get detailed information on the transaction ahead of an extraordinary general meeting scheduled for October 26.All voting members of the society will be invited to […]

Victoria Mortgages to complete buyer talks today

Victoria Mortgage’s administrator KPMG says that it is likely to be able to confirm a buyer for the lender today at the earliest.There have been suggestions in the market that Victoria will be snapped up despite annoucing that it was entering administration last month.KPMG says that is is still talking to a number of interested […]

How QE is distorting the gilt market

By Mike Riddell The moves in gilts in August were truly exceptional. Volatility in the gilt market (based off 10-year gilt futures) has soared to close to the highest levels seen this millennium, on a par with the eurozone debt crisis of 2011/12 and behind only the global financial crisis of 2008/09. The first distortion […]


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