The draft Financial Assistance Scheme (Miscellaneous Amendments ) Regulations 2010 were laid before Parliament on 20 January and this was followed up on 28 January with consultative documents on draft guidance which amongst other areas sets out a proposed actuarial valuation process for pension schemes eligible for the Financial Assistance Scheme (FAS) and which will transfer assets to the government – these are referred to as FAS2 schemes. This guidance takes into account earlier consultation in the period 2 April to 15 May last year and a webinair for actuaries with speakers from the Pension Protection Fund.
Broadly the draft guidance sets out a mechanism for determining if members of FAS2 schemes should receive higher benefits than standard FAS compensation.
As mentioned in our earlier blog, “How pension schemes will be valued for admission into the Financial Assistance Scheme“, the PPF is proposing that the FAS2 actuarial valuation calculations will include equalisation of Guaranteed Minimum Pensions.
The current draft guidance does not differ materially from that issued last year and from the processes presented in the webinair; we believe that it is therefore unlikely that there will be many changes in the final guidance which we anticipate coming on stream by the middle of this year.
The PPF have built onto some the S143 actuarial valuation principles for schemes going through assessment but there are a substantial number of material differences. One area of similarity is that data has to be cleansed before the actuary is instructed to proceed and the actuary has to be satisfied with the quality of the data.
Spence and Partners have extensive experience of carrying out S143 valuations including data cleansing, and we are gearing up to adapt our professional skills for FAS2 schemes.