Asset-backed contributions (ABCs) details
The Regulator is asking each scheme to provide the details of each ABC arrangement it has entered into. The details are split into 3 sections:
• ABC structure - containing the core details of the ABC. These details are less likely to change over time.
• ABC financial details - containing details about the value of the ABC that will change each time an ABC is updated to a more recent valuation effective date.
• ABC payment schedule - containing details of the payments into the scheme from the ABC that are likely to change each time an ABC is updated to a more recent valuation effective date.
When a new ABC is added to a scheme, all of the sections will need to be completed.
When an existing ABC is updated to a more recent valuation effective date, the ABC structure will be pre-populated (but can still be edited) and the ABC financial details and ABC payment schedule sections will be blank and need to be completed.
ABC structure
ABC name
Please provide a name for this ABC that means something to the scheme (eg. if the underpinning asset is a property, then the name of the property might be used). If you have more than one ABC active on this scheme, then each one will need a unique name. This name can be used in communications with the Regulator to identify which ABC is being referred to.
ABC funding method
"Using existing assets" means the investment was made from the scheme’s existing assets without a corresponding contribution being made by the employer for the full amount of the investment.
If you selected "other" as a funding method, the Regulator would like you to describe the funding method you are using for this ABC arrangement.
Type of underpinning asset
ABC arrangements are described as ‘asset-backed’ because an asset (typically owned by the sponsoring employer or the wider group) will be transferred to the arrangement. The underlying asset is typically intended to generate the income to allow the promised payments under the ABC to be paid. Please confirm the type of asset owned by the ABC.
If more than one type of asset is transferred to the ABC then please indicate the asset type which constitutes the largest proportion of value.
If you selected "other" as a type of underpinning asset, the Regulator would like you to describe the type of asset you are using for this ABC arrangement.
Assets from within the employer group
Did the employer group (an employer, parent, sister company or a subsidiary) previously own the assets that were transferred pursuant to the ABC?
Cash flows from within the employer group
The ABC will generate an income (via the use of the underlying asset) which enables the ABC to make payments to the Scheme. Does the ABC’s income come from within the employer group (an employer, parent, sister company or a subsidiary)?
For example, if the underlying asset in the ABC is a property, does an entity from within the employer group pay to use or occupy the property?
Existing guarantees or contingent assets surrendered
Has the scheme released any pre-existing guarantees or contingent assets as a part of receiving the interest in the ABC?
Final calendar year of payment
Please enter the final calendar year in which the ABC contribution stream will end.
ABC financial details
Valuation of the scheme's interest in the ABC
In order for the ABC to be valued for the purposes of a Part 3 valuation for inclusion within the overall scheme asset value, the trustees will have enlisted the assistance of their advisors to provide a value of the ABC income stream in present value terms. This net present value of the ABC should also be quoted in the scheme’s audited accounts as at the Part 3 valuation date. If the ABC has been entered into/implemented since the last triennial valuation date, please include the valuation at the date of the implementation.
Date of valuation of the scheme's interest in the ABC
Please specify the date at which the valuation of the Scheme’s interest in the ABC has been calculated. In most cases this will be the effective date of the most recent Part 3 valuation. If the ABC has been entered into/implemented since the last Part 3 valuation date, please provide a value as at the effective date of the implementation.
Trustees have a valuation of the underpinning asset
As part of the implementation of the ABC, the trustees may have assessed, or commissioned a third party to assess, the value of the assets underpinning the ABC.
The valuation of the underpinning asset
Estimate of the value of the asset underpinning the ABC, from the most recently available valuation/assessment.
This question is only answered if the trustees have a valuation of the underpinning asset.
Professional valuer engaged for the valuation
A professional valuer is a professionally qualified valuer or accountant, not connected to or associated with the employer or trustee body, upon whose valuation services the trustees are entitled to rely in making their decision.
This question is only answered if the trustees have a valuation of the underpinning asset.
ABC payment schedule
The ABC will typically provide for an income stream to be paid from the ABC directly to the scheme. This is usually a known £ amount. There are up to 25 boxes provided in the ABC payment schedule section, to capture the annual income stream, starting with the income in the 12 months from the effective date of the valuation of the scheme's interest in the ABC (this is the date you have provided in the ABC financial details section of the scheme return). Typically the valuation date of the scheme's interest in the ABC will be the most recent Part 3 valuation date, or later, if the ABC has been implemented after the most recent Part 3 valuation.
Therefore if the valuation date of the scheme's interest in the ABC is at 31 December 2013 then the income quoted in “year 1” should reflect the income being paid to the Scheme from the ABC in the period from 1 January 2014 to 31 December 2014. If the valuation date of the scheme's interest in the ABC is at 30 June 2014, then the income quoted in “year 1” should reflect the income being paid to the Scheme from the ABC in the period from 1 July 2014 to 30 June 2015.
In some cases, the income may vary according to external factors (e.g. the rate of CPI). In these cases, the user should input an estimate.
In some cases, the payments due from the ABC are conditional, for example being dependent on the funding position of the scheme. In these cases, the user should assume that each conditional payment will be made.