Glossary of Terms
CVA – Company Voluntary Arrangement
A CVA is a binding arrangement between a company and its creditors whereby a company generally agrees to pay creditors X p in the pound over a period of time. It is a tax-free way of reducing a company’s burden of debt and saving the business.
Employer’s covenant
Following the Pensions Act 2004 and the establishment of the Pensions Regulator, Trustees are now required to perform regular reviews of the financial strength of the sponsoring employer to ensure it can meet its obligations to the scheme. This is known as the Employer Covenant review.
PPF – Pension Protection Fund
The Pension Protection Fund was established to pay compensation to members of eligible defined benefit pension schemes, when there is a qualifying insolvency event in relation to the employer and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.
The Pension Protection Fund is a statutory fund run by the Board of the Pension Protection Fund, a statutory corporation established under the provisions of the Pensions Act 2004. The Pension Protection Fund became operational on 6 April 2005.This website provides the most up to date information and guidance for all those with an interest in defined benefit pension schemes.
http://www.pensionprotectionfund.org.uk/
SFO – Statutory Funding Objective
Under the Pensions Act 2004, defined benefit pension schemes are required to meet a statutory funding objective. The Act requires schemes to 'have sufficient and appropriate assets to cover its technical provisions'. Although it is for trustees, with the employer's agreement, to decide how to calculate their scheme's technical provisions, they must still comply with regulations and guidance. In deciding the basis for calculating technical provisions, the trustees must obtain actuarial advice. If agreement between trustees and employer cannot be reached, it must be reported to the Pensions Regulator.
tPR – The Pensions Regulator
The Pensions Regulator is the new regulator of work-based pension schemes in the UK. Created under the Pensions Act 2004, it has wider powers and a new proactive and risk-focused approach to regulation.
tPR's top priority is to tackle risks to members' benefits and focusses its resources on identifying and reducing risks, working with schemes to get them on the right track.
http://www.thepensionsregulator.gov.uk/
