The Association of Consulting Actuaries (ACA) has called for a wider review of section 179 valuation requirements, arguing that the current process is disproportionate while the conventional Pension Protection Fund (PPF) levy remains at zero.

The call formed part of the ACA’s response to the PPF’s consultation on proposed changes to the assumptions used for section 143 and section 179 valuations.

The ACA broadly supported the proposed changes to the valuation assumptions but questioned the continued requirement for all schemes to complete a detailed section 179 valuation every three years, particularly given that the conventional levy was set at zero for a second consecutive year.

ACA Pension Schemes Committee chair, Peter Williams, said the consultation provided an opportunity to reconsider the wider valuation process and explore whether the PPF could obtain the information it required in a more proportionate way.

“The PPF clearly needs to understand the risks it faces, but there may be simpler and more proportionate ways of getting the information it needs," he added.

The ACA also raised concerns about the proposed implementation timetable, under which the revised assumptions would apply to valuations with effective dates on or after 31 May 2026.

It warned that applying the assumptions retrospectively could require schemes to revisit or rework valuations already underway.

The association therefore recommended that the new requirements become mandatory only for valuations with effective dates after the final assumptions have been published.

For section 143 valuations, it suggested that schemes could instead be given the option to apply the new assumptions from 31 May 2026.

The ACA also highlighted potential consequences for The Pensions Regulator’s (TPR) Fast Track funding regime, as some of its requirements rely directly on section 179 assumptions.

These include assumptions used to estimate how many members may leave a pension to a spouse or partner.

“Where assumptions are also used directly by TPR for a different purpose, changes can have wider consequences,” Williams said.

“TPR should therefore consider whether its requirements should continue to be linked automatically to the PPF’s assumptions.”

Meanwhile, the Society of Pension Professionals (SPP) welcomed the PPF’s efforts to align its section 143 and section 179 valuation assumptions with developments in bulk annuity pricing and market practice.

It also supported the use of section 143-style financial and mortality assumptions by commercial consolidators when assessing their wind-up triggers, arguing that these provided a more robust basis aligned with insurer pricing and the risks being assessed.

However, the SPP warned that allowing for post-retirement increases on eligible pre-1997 PPF compensation could increase section 179 liabilities and materially raise Alternative Covenant Scheme (ACS) levies for some commercial consolidators unless the levy framework was recalibrated.

SPP DB Committee chair, Jon Forsyth, stressed that regular reviews of the assumptions were important to maintaining a credible and risk-sensitive framework, particularly as insurer pricing, market practice and the regulatory framework for commercial consolidators evolved.

However, he argued that changes to the valuation methodology should not produce levy increases that were disproportionate to the underlying risk.

“Such increases have the potential to negatively impact the commercial consolidator market. The ACS levy framework should therefore be recalibrated so that levy outcomes remain proportionate and reflect underlying risk,” he added.

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