Citation, commencement, extent and interpretation

1. —(1) These Regulations may be cited as the Pension Protection Fund (Valuation of the Assets and Liabilities of the Pension Protection Fund) Regulations 2006 and shall come into force on 1st April 2006.

(2) These Regulations extend to Northern Ireland.

(3) In these Regulations—

“ the Act ” means the Pensions Act 2004;

“ the Order ” means the Pensions (Northern Ireland) Order 2005 ;

“ appointed actuary ” shall be construed in accordance with regulation 6;

“ contribution notice ” means a notice issued under section 38 (contribution notices where avoidance of employer debt), 47 (contribution notices where non-compliance with financial support direction) or 55 (contribution notice where failure to comply with restoration order) of the Act, or Article 34, 43 or 51 of the Order;

“ financial support direction ” means a direction issued under section 43 of the Act or Article 39 of the Order (financial support directions);

“ the Pension Protection Fund ” means the Pension Protection Fund specified in section 173(1) of the Act (Pension Protection Fund);

“ relevant accounts ” means the most recent accounts kept by the Board in accordance with paragraph 22(1)(a) of Schedule 5 to the Act (the Board of the Pension Protection Fund: accounts);

“ restoration order ” means an order made under section 52 of the Act or Article 48 of the Order (restoration orders where transactions at an undervalue);

“ section 75 debt ” means so much of the amount treated, by section 75 of the Pensions Act 1995 or Article 75 of the Pensions (Northern Ireland) Order 1995 (deficiencies in the assets), as a debt due from the employer to the trustees or managers of a scheme immediately prior to the assumption of responsibility for that scheme by the Board, by virtue of section 161 of the Act or Article 145 of the Order (effect of Board assuming responsibility for a scheme), which still remains due at the valuation date;

“ valuation date ” means the date in relation to which the assets and liabilities of the Pension Protection Fund are calculated.

Determination of value of Pension Protection Fund assets

2. Subject to regulations 4 and 5, in determining the value of the assets of the Pension Protection Fund, the appointed actuary shall adopt the value given of the assets of the Fund as stated in the relevant accounts, and that value shall be taken to be the value of those assets at the valuation date.

Determination of value of Pension Protection Fund liabilities

3. For the purposes of the preparation of an actuarial valuation under paragraph 22(2)(a) of Schedule 5 to the Act—

(a) the liabilities of the Pension Protection Fund shall be any sums or properties falling to be paid or transferred out of the Fund required to meet liabilities listed in section 173(3) of the Act; and

(b) the value of a liability shall be the present value of that liability at the valuation date.

Excluded assets

4. There shall be excluded from the value of the assets of the Pension Protection Fund any amounts treated as a debt due to the Board which it is unlikely to—

(a) recoup without disproportionate cost; or

(b) recover within a reasonable time.

Alternative valuation of specific assets

5. —(1) For the purposes of the valuation of the assets of the Pension Protection Fund, the value of a contract of insurance shall be—

(a) the value of the liability secured where the contract of insurance is a relevant contract of insurance in accordance with section 161(8) of the Act or Article 145(8) of the Order; or

(b) where the contract of insurance is not a relevant contract of insurance—

(i) the surrender value of the contract of insurance; or

(ii) where it appears to the appointed actuary that the surrender value of the contract of insurance does not accurately reflect its actual value at the valuation date, he shall adopt such a value as appears to him to be appropriate.

(2) For the purposes of the valuation of a contribution notice, financial support direction or restoration order, the appointed actuary shall adopt, as the value of the asset which is the subject of the contribution notice, financial support direction or restoration order, the amount due to the Board given in that notice, direction or order.

(3) For the purposes of the valuation of the Pension Protection Fund, where the appointed actuary is of the opinion that any section 75 debt, or proportion of such a debt, will be recouped in the future, he shall treat that debt, or such proportion of that debt that he considers will be recovered, as an asset of the Fund.

(4) Subject to paragraph (5)—

(a) if the appointed actuary—

(i) has been given notice; or

(ii) holds the opinion,

that the value of any asset specified in the relevant accounts, that is not excluded from the actuarial valuation, is substantially different at the valuation date from that set out in the relevant accounts, he shall adjust the value of the asset to the present value of the asset at the valuation date; or

(b) where the appointed actuary—

(i) has been given notice; or

(ii) holds the opinion,

that there exists an asset of the Fund which is not listed in the relevant accounts and which is not excluded from the actuarial valuation, he shall adopt the present value of the asset as appears to him to be appropriate.

(5) The appointed actuary shall not make an adjustment of the value of an interest in real property unless the adjustment reflects a more recent valuation given, and verified, by a chartered surveyor current on the date the valuation is signed.

The appointed actuary

6. For the purposes of paragraph 22(4)(a) of Schedule 5 to the Act, the prescribed qualification to act as the appointed actuary is Fellowship of the Institute and Faculty of Actuaries.