UK: PPF Contingent Assets: Play By The Rules, Or Pay The Price

Last Updated: 22 June 2015
Article by Kris Weber

A recent determination of the PPF Ombudsman has reiterated the importance, when registering a PPF-compliant contingent asset, to follow any procedural requirements of the PPF to the letter. Those who fail to do so, risk coming unstuck with potentially significant consequences...


The Action for Children Pension Fund is a perfectly normal, final salary pension scheme. Its trustees, in accordance with what is now everyday good practice, sought contingent security over an asset of the sponsoring employer in order to further enhance the security of the employer's covenant in favour of the Scheme. A standard-form charge over real estate owned by the sponsor was granted in favour of the Scheme, and subsequently varied with the parties' consent. Certification of that charge was given in the normal way by the Scheme's legal advisers. And everybody lived happily ever after.

Or did they?

There, however, the fairytale ends. For here, for the sponsoring employer at least, there was no fairytale ending. For it turns out that there were two minor procedural errors in the documents submitted to the PPF in support of the contingent asset agreement:

  • The legal opinion was required to confirm that the real estate, over which the charge in the PPF's favour was being created, was subject to no prior or pari passu charges in favour of another security-holder.
  • The legal opinion given shortly before the PPF's 31 March deadline for submission was provided, and dated, before the revised charge was registered at Companies House.

A game of consequences

As is the PPF's normal practice, levy invoices are not issued to schemes until some time after the deadline for contingent asset submissions, i.e. well into the year to which they relate. In other words, by the time that anyone unfortunate enough not to have ticked every single one of the PPF's boxes finds out that a box remains unticked, it is too late to do anything about it. And that, of course, was precisely what happened here. The Scheme's levy invoice failed to recognise the contingent security that had been granted in favour of the Scheme, and the levy was accordingly higher – perhaps by a considerable margin – than it would have been, had the contingent asset been recognised as everyone intended.

The trustees of the Scheme appealed (in light of what one might assume to be the considerable sums at stake) to the PPF's Reconsideration Committee. It found in favour of the PPF. The trustees appealed again, this time to the PPF Ombudsman. He too found in favour of the PPF. His determination was to uphold the outcome that, by reason of the Scheme's non-compliance with the various formalities required for registration and recognition of a contingent asset, its existence could not properly be taken into account when setting the Scheme's levy for the levy year in question.

Wedlake Bell comment

In one sense a lot of sympathy must go out to the Scheme in question and its employer, which failed on two technicalities to obtain a levy reduction that it could clearly have properly obtained had the paperwork been in order. Equally, it is harder to feel sympathy given that the pensions industry knows – and is regularly reminded – that the PPF expects its requirements to be followed, to the letter, in order for contingent assets to be recognised and levy reductions obtained.

Clearly the omission of the words in question from the legal opinion that supported the contingent asset, had no bearing whatsoever on the actual effect and extent of that contingent security. Nor did the fact that the legal opinion pre-dated the registration of that security at Companies House, affect the additional security that it actually gave the Scheme in terms of sponsoring employer covenant. The extra security was in place at all material times, the additional benefit (in the sense of lower employer default risk) flowed through to the PPF at all material times, so why should the full levy still have to be paid?

But that's really to miss the point. The PPF has to set out a level playing field for all participants. Particularly given the significant sums of money at stake, it is imperative that everybody knows what the rules are and sticks to them. If the PPF allows one technical oversight to be ignored, that is potentially to the detriment of all those who have strived to make 110% sure that every single box which should be ticked, is indeed ticked. It would also open questions as to where one should draw the line in assessing the subjective materiality of any breach of the PPF's procedural requirements.

The message really needs to be, make absolutely sure that you do everything the PPF need you to do. There are strong policy reasons in support of strict compliance with its requirements, and those who choose not to comply with them – whether or not intentionally, or with any motive in mind – do so at their peril.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.