UK Finance News

FAS Assessment and PPF assessment might easily be described as two sides of the same coin because both form part of the pension rescue package available to employees whose company pension schemes have collapsed.

There are five stages involved in the FAS (Financial Assistance Scheme) process – notification, qualification, provision of member data, assessment, and payment. In the PPF assessment (Pension Protection Fund) process, there are also five stages, including a fairly lengthy assessment period of at least a year followed by a transition period and then takeover by the PPF itself.

The FAS was set up to help workers whose pension scheme collapsed or began to wind up between 1 January 1997 and 5 April 2005. The PPF was established in April 2005 to pay compensation to members of final salary pension schemes.

FAS payouts are a maximum of 90% of the pension entitlement, with a cap set at £30,297 for anyone whose entitlement begins between 1 April 2011 and 31 March 2012. If the PPF takes responsibility for a scheme, members will typically receive 100% of any pension compensation owed to them. The payout is 90% for those yet to retire, with the cap for the current financial year for any member aged 65 set at £33,219.

Notification and qualification are the first two steps in the FAS assessment process using form FAS A1. This provides some basic information about the scheme, usually provided by a trustee, manager, or professional advisor to the scheme. If the scheme is already wound up, a former trustee, manager or professional advisor can provide the information. Information can also be provided by a member of the scheme or their appointed representative, a surviving spouse or civil partner of a member of the scheme who has died.

Successful notification does not guarantee qualification, which is the next step, achieved by completing the second part of form FAS A1 and providing appropriate documentation, such as a copy of the scheme’s trust deed and rules. Once a scheme completes qualification, information about individual members and their pensions are provided over a time-limited three month period.

Only then can the FAS assessment stage begin. Eligible members are identified and the levels of assistance payable calculated. They are then notified and sent the Personal Details form FAS A2 to complete in order to confirm their personal details. Payments will not begin until FAS A2 has been completed and returned to the FAS.

PPF assessment begins following the receipt and validation of a Section 120 Notice – usually issued following an ‘insolvency event’, for example, the appointment of administrators to look after the affairs of the insolvent company. The PPF then has 28 days to decide if the pension scheme is eligible.

All data for the scheme is assessed for accuracy to make sure members receive the correct compensation payments. During this time, too, the scheme’s trustees are charged with keeping members up-to-date with progress, and for paying pensions at PPF levels during the assessment process. Once transition has been completed, and the scheme deemed to have insufficient assets, the PPF will take over the scheme.

A major new service for businesses will go live on Wednesday allowing start-ups, small business and SMEs to explore their finance and funding options quickly and easily, as new data shows public sector funding has dropped by a quarter.

Statistics from BusinessFunding.co.uk’s database – which tracks over 1,000 UK business funding sources – show the number of public sector-backed funding sources available to companies has shrunk by at least a quarter in the last year alone, and the number of grant schemes has shrunk by a similarly large amount.

Its key finding is that of the 286 public sector-backed funds it was tracking a year ago, 80 (28.0%) have since closed, with the North West particularly badly hit.

Similarly, on grant funding: of the 250 grant funding sources tracked that were active a year ago, 64 (25.6%) have closed. Here, nationwide schemes and those targeted at the South have been relatively protected, whereas those targeted specifically at the Midlands have fared badly.

With spending cuts progressing apace across a wide variety of business funding sources, this trend looks set to continue.

The research extends across the gamut of the BusinessFunding.co.uk database, which tracks the activity of over 1,000 funding sources, including almost all of the major equity investor organisations (venture capital funds and business angel networks) and hundreds of business lenders (from general business loan providers to specialist providers like invoice discounters).

With the evident decline of public sector and grant funders, UK start-ups and SMEs must diversify the range of options they look to when seeking funding.

The good news is that a wide variety of less-well-known funding sources do exist, from specialists such as asset-backed lenders and business cash advancers and from more traditional equity investors. According to BusinessFunding.co.uk’s research, these equity investors have provided funding over £500m into UK companies so far this year.

The BusinessFunding.co.uk website aims to help those businesses looking for funding but unsure as to their options find funders who are prepared to assist them.

Dr Stephen Bence, Founder and Director of

BusinessFunding.co.uk, says: “We were often being asked to compile lists of properly-qualified funding sources for a particular project or company. We found these tasks incredibly time-consuming because the information could not be found in one place – not to mention the complexity of the funders’ eligibility criteria.

“This is our solution to that problem: a comprehensive and detailed database of funding sources coupled with an easy-to-use online tool to help direct businesses towards the sources of funding and finance that are most suitable for them”.

Launch partners for BusinessFunding.co.uk include: Baker Noel Chartered Accountants, the legal firm Vincent Sykes & Higham, the Public Relations firm Presswire and the digital search agency Red or Blue.

In financial terms, a Contract for Difference (or CFD) is a contract agreed between two parties, commonly known as a ‘buyer’ and a ‘seller’.  The contract states that the buyer will pay the seller the difference between the current value of a named ‘asset’ and its value at contract time.

However, if the current value difference is negative when compared to the contract time, it is agreed that the seller will pay the set difference to the buyer.

CFD’s are traded between individual traders and as such there are no set contract terms.

They were originally developed in the early 1990’s in London and were initially used by hedge funds and institutional traders to hedge their exposure to stocks on the London Stock Exchange in a cost-effective way.

CFD’s are financial derivatives that allow traders to take advantage of price adjustments.  They are also commonly used to speculate on those markets.

CFD’s are used in many countries including the UK, Japan, Germany, France, South Africa, Switzerland, Australia, Ireland and Spain but due to restrictions are not permitted in the United States, while Hong Kong have plans to issue CFD’s in the near future.
With the increase in personal share ownership there are many websites that now offer individuals new to trading help and advice on how best to invest their money in stocks and shares.

The TD Derivatives Trading website allows you to manage Contracts for Difference, Forex and Futures trading with its integrated suite of trading platforms, so you can undertake all your CFD, Forex and Futures trading from one account.  The account also gives you access to TD’s suite of trading platforms: the web-based TD Derivatives Web Trader and the downloadable TD Derivatives Professional with Direct Market Access.

When entering the world of trading you should remain alert and cautious at all times and remember one or two good investments can be nothing more than beginners’ luck, and losing focus at any time could have disastrous consequences that mean your losses could very quickly escalate out of control.

With CFD online trading you should fully understand the risks and seek independent advice whenever necessary.

To help you gain some knowledge and confidence without the risk of losing money, TD Derivatives offer a 20 day free demo account with all the functionality of a live account and gives you a virtual £100,000 allowing you to put your trading skills and strategies to the acid test.

If you’ve decided to buy a home, you want the whole process to go as smoothly as possible. Getting onto or moving up the property ladder can be a difficult and stressful experience, and moving home is never easy. The last thing you need is to find that you’re tied into the wrong kind of mortgage.

“Variable Rate”, “Fixed Rate”, “Capped Mortgage”, it can all seem a bit confusing. This handy guide is here to help you understand the three most common types of mortgage so that you can make the best decision when buying a home for you and your family:

Variable Rate Mortgage
The most common type of mortgage in the UK, the Variable Rate Mortgage is tied to Bank of England base rates. Your monthly repayments are determined by the Standard Variable Rate (SVR) of your mortgage lender, which is always linked to the Bank of England’s base rate. It’s important to remember, however, that lenders, not the Bank of England, actually set SVRs, so they may vary from one lender to the next. It’s always advisable to shop around for the most competitive rates.

Fixed Rate Mortgage
As the saying goes, this type of mortgage “does what it says on the tin”. Regardless of changes in Bank of England base rates, the interest rate on your mortgage is “fixed” at the rate you agreed with your lender. Good if you need the certainty of paying the same rate, month in, month out, year in, year out. Great if base rates rocket. But be careful, if base rates go down, you’ll be left out of pocket.

Capped Mortgage
Also known as a Collar Mortgage, a Capped Mortgage combines key features of both Variable Rate and Fixed Rate mortgages. Your mortgage interest rate will follow the Bank of England rate, but it won’t go above a certain ceiling, or “cap”, agreed with your lender. The beauty of a Capped Mortgage is that it gives you the security of knowing that your mortgage interest won’t go above a certain level for the duration of the agreement, whilst allowing for the possibility of a lower rate if base rates go down. Be sure to check the details with your lender, however, as some Capped Mortgages are capped below as well as above the starting rate, meaning that your interest rate might not go as low as the Bank of England base rate.

According to a new report, some of the UK’s largest companies risk seeing an increase in the deficits of their pension schemes due to their failing to lock in recent market gains by moving money into less risky investments.

A spokesperson for the consultancy PensionsFirst today suggested that assets held by benefit schemes of FTSE 100 companies have increased by 29 billion GBP’s over the past eight months, while liabilities have fallen 25 billion GBP’s.

Though this has decreased the funding deficit by 54 billion GBP’s to 80 billion GBP’s as investments in higher risk assets such as stocks, private equity or hedge funds, paid off, the report warns that the schemes are missing the chance to “de-risk” and could repeat the mistakes of 2008 when companies failed to capitalise on an increase in growth before the turmoil of the current financial crisis kicked in.

Benjamin Reid, Chief Executive at PensionsFirst commented:

“It is worrying to think that many (schemes) are leaving themselves open to this happening again” .

This failure to act may have a knock on effect that means companies may have to make up the shortfall, which in turn means a decrease in profits.