Atkin trustees, actuaries, consultants & administrators

Current Issues - September 2016

Falling bond yields are likely to increase deficits for many: Schemes need to consider whether their transfer value basis and approach for setting discount rates for funding remain appropriate. In particular, Trustees who have not adopted a gilt matching strategy may want to derive their discount rate based on inflation and dividend yields which has proved much more resistant to the current market fluctuations. For those schemes with a valuation in progress, Trustees will need to consider whether allowance should be made for the changes in market conditions since the valuation date. Finally, the value of the liabilities shown in the Company accounts is likely to increase significantly.

VAT - further extension announced meaning current VAT recovery arrangements can continue until 31st December 2017 (at least).

PPF consultation on future levy rules: The PPF has indicated that they may review their insolvency risk model for the 2018/2019 levy year onwards which could have far reaching consequences for many Schemes and their sponsors. In particular, they appear to address some of the concerns raised by smaller companies who felt the current methodology selects against them. A consultation is scheduled for later this year or early 2017 and we will be happy to pass on your views if you want to share them.

DB Deficits – Investor concern: Fund managers have expressed concerns about the ability of companies with significant deficits to pay dividends.

ECJ to Rule on PPF compensation cap: The ECJ have been asked to Rule whether the extent of the reductions applied to benefits by the PPF are in line with EU rules with the cost of any improvement to be met by PPF levy payers. Of course there is a lot that can change before a ruling is made.

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I have worked on a number of schemes with Atkin Trustees Limited and with Richard Bryant in particular. I found them to be a very organised team who focus on achieving practical and cost efficient solutions.

Michael M Jones, Partner, Charles Russell LLP