Following recent court cases we’ve been considering the action we need to take to address the judgments. We’re aware that actuaries need to determine how to reflect the impact of these judgments on s179 valuations.

To help answer the questions we’ve been getting about these cases we have put together the following Q&A:

Following the judgment in the Hampshire case by the European Court of Justice , what level of compensation should be taken into account in s179 valuations?

For now, valuations should be carried out under the current s179 guidance, G8, and no additional allowance should be made as a result of the Hampshire judgment. This is our interim position and will be reviewed as we work through the impact of the judgment.

Find out more about how we’re implementing the European Court of Justice ruling.

Following the judgment in the Beaton case, what level of compensation should be taken into account in s179 valuations?

For schemes that already have an s179 valuation underway, it is not our expectation that they take account of the Beaton case. Schemes that are starting the s179 cycle should consider the effect of the judgment on the valuation of the schemes’ protected liabilities. We will keep this position under review as the law develops. 

Does the Lloyds judgment mean that GMP equalisation and the application of the statutory underpin needs to be taken into account in s179 valuations?

The Lloyds judgment is a recent development that schemes are likely to be digesting, and considering its impact. If schemes already have s179 valuations underway it is not our expectation that those valuations would allow for GMP equalisation. Schemes that are starting the s179 cycle should start considering the effect of the judgment and which of the permissible equalisation methods they might adopt. We will keep this position under review.

When certifying DRCs under Option Alpha should actuaries treat the additional compensation payable as a result of the Hampshire, Beaton and Lloyds judgments as an augmentation?

For the 2019/20 levy year it is not necessary to treat the impact of the Hampshire, Beaton and Lloyds judgments as an augmentation when certifying DRCs under Option Alpha.

Will you be adjusting s179 valuations to take account of the Hampshire, Beaton and Lloyds judgments?

For the 2019/20 levy year we will not be adjusting s179 valuations to take account of the Hampshire, Beaton and Lloyds judgments.

If you have any further questions about how the impact of these judgments please contact us on 0345 600 2541 or email [email protected].

Published: December 2018