PPF launches consultation on updated valuation assumptions

The Pension Protection Fund (PPF) has launched a consultation on proposed changes to the assumptions used for valuations under sections 143 and 179 of the Pensions Act 2004. 

The consultation comes after a review of bulk annuity market pricing. 

The review found pricing had become more competitive since the PPF’s last detailed review. 

The main proposed changes focus on discount rates and longevity assumptions. 

The PPF said the updates are intended to keep the assumptions in line with current buy-out pricing and would generally reduce estimated scheme liabilities under these valuation bases.

Aaron Pang, acting chief actuary at the PPF, said: “We regularly review our valuation assumptions to ensure they remain appropriately aligned with the bulk annuity market and continue to meet the objectives set out in legislation.

“Our latest review suggests that market pricing has moved since the assumptions were last comprehensively updated. 

“The proposals in this consultation are intended to reflect those developments while continuing to provide a practical and proportionate framework for valuations.”