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

The assumptions are used to estimate the cost of securing PPF levels of compensation with an insurer and underpin section 143 valuations carried out during PPF assessment periods, alongside section 179 valuations used for several purposes, historically including PPF levy calculations.

Following a review of bulk annuity market pricing, the PPF found that pricing had become more competitive since its last detailed review.

The primary changes proposed in the consultation cover discount rates and longevity assumptions.

The PPF proposed increasing discount rates by 20 basis points for pensioners and 30 basis points for deferred pensioners to reflect the more competitive pricing.

It also proposed the adoption of the Self-Administered Pension Scheme (SAPS) ‘S4’ mortality series of base tables, as published by the Continuous Mortality Investigation (CMI), and the adoption of the CMI_2024 model for mortality improvements.

The PPF said the proposed changes aim to keep the assumptions aligned with current buyout pricing and would generally reduce estimated scheme liabilities under the valuation bases.

"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,” said PPF acting chief actuary, Aaron Pang.

“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.

“We encourage trustees, actuaries, advisers, insurers and other stakeholders to review the proposals and share their views."

The consultation is open until 16 September 2026, with the PPF intending to publish its final decision in October 2026, subject to the outcome of the consultation.

The revised assumptions are expected to apply to valuations with an effective date on or after 31 May 2027.

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