LCP’s response to the Department - Executive summary of our views - for Work and Pensions consultation

(We note that the government Note on prudence of 0.6% pa: intends to consult on the use of the PPF’s existing reserves and we think that that consultation should be completed before the government discounts the idea of We recognise that a risk of operating the 100% PPF underpin independently to the using the PPF’s reserves to support the smooth operation of the PPF 100% current PPF risk pool is th. [...] • the level of interest on the repayments and whether these would reflect default risk (on behalf of the members) Treatment of entering scheme deficits and surplus • recourse to the sponsor on failure to make repayments, how the PSC would rank versus other creditors of the sponsor, and whether the debt to PSC would be 33. [...] the consolidator, given the expected capital requirements and timescales? The consultation is silent on the approach to asset valuation and asset transfer from The expected capital requirements will ultimately be dependent on the demand for the schemes to the PSC. [...] Government underwriting of the PSC’s capital requirements (even if with limits) is likely to give the We can see how if the government were to underwrite the capital buffer of the PSC, PSC a material actual and/ or perceived advantage compared to insurers and then this could give the government a role in influencing the PSC’s investment superfunds, particularly if it allows the PSC to price at the. [...] How could any government underwriting be structured to support the aims of If the PPF reserves are to be used for underwriting the capital buffer for the PSC, then the consolidator whilst limiting risks to the taxpayer? the PPF should benefit from upside from the PSC, and it should be clear how that upside is to be used within the PPF.