PPF levies: case 2

A scheme’s trustees referred a PPF decision related to the calculation of their scheme’s risk-based levy. They said the data used to calculate the levy was “incorrect in a material respect” – in which case the PPF could take into account alternative data.

The levy calculation rules provided for a failure score attributed to the employer and used in the calculation to be that which Dun & Bradstreet allocated to the company “in the ordinary course of its business”.

Dun & Bradstreet had provided the PPF with a failure score for the relevant employer based on a reference number held on the Exchange system.

The reference number used by Dun & Bradstreet was for another company which, although related to the employer, was not participating in the scheme.

The scheme trustees notified the PPF that they had not entered the reference number onto the Exchange system in the first place and had been unable to amend it. This was subsequently confirmed by the PPF.

If the failure score used in the calculation of the risk-based levy was the normal failure score which Dun & Bradstreet would assign to the employer in the ordinary course of its business, there was no scope to depart from this.

We decided that the PPF reconsideration committee had not reached their decision correctly.

Section 175(2) of the Pensions Act 2004 required the levy to be calculated by reference to the likelihood of an insolvency event occurring “in relation to the employer in relation to the scheme”.

A failure score that related to an entirely different entity could not be anything other than incorrect in a material respect.

We told the PPF to replace the decision with a new one, based on the failure score for the right company.