The Pension Protection Fund (PPF) has announced that it will be working with global information services company, Experian, as its insolvency risk provider. Insolvency risk, or failure, scores are one of the three main factors, alongside investment and underfunding risk, needed to calculate the individual pension protection levies paid by eligible pension schemes.
For the past eight years, the PPF has been using Dun & Bradstreet (D&B) to provide this service but it decided to change supplier following a competitive tendering process.
There will be a handover period between the two companies which means the PPF will not be using Experian scores to calculate levies until the 2015/16 levy year. During this period, the PPF will continue to use D&B to calculate the levy and the current methodology remains unchanged.
In the meantime, Experian will be working alongside the PPF, with input from stakeholders, to develop a bespoke model for calculating insolvency risk. This bespoke model will focus on measuring insolvency risk for the PPF's universe of sponsoring employers, supported by Experian's detailed understanding of the UK's economic environment and its impact on commercial solvency.
The intention is that schemes and sponsoring employers will have access to the new insolvency risk scores from early 2014.
PPF Chief Operating Officer, David Heslop, said: "Assessing the risk of an employer going bust, which could mean its pension scheme entering the PPF, is at the heart of how we calculate individual levies and how we assess our overall risk. So, it is essential that we get the most suitable supplier to meet our future needs."
The PPF will now be working with both businesses to make sure there is a seamless transfer of responsibilities.
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