Platinum Pension - FAQ's

Q1. What exactly is Prudential Platinum?

Prudential Platinum is a unique pension arrangement designed for companies who tender for PPP or PFI contracts, enabling them to meet the criteria stipulated by government in relation to pensions provision for employees who transfer under the Transfer of Undertakings (Protection of Employment) Regulations 1981 ("TUPE").

Q2. How is Prudential Platinum structured?

There are separate contracts for defined benefit and defined contribution plans. The defined contribution option uses Prudential's Stakeholder scheme. This page concentrates on the defined benefits option.

Q3. So what is the defined benefit option?

The Defined Benefit option is a pension scheme open to non-associated employers who require a passport to be able to meet the requirements for tendering for contracts. Separate passports are available for the Local Government Pension Scheme (LGPS), Principal Civil Service Pension Scheme (PCSPS) and National Health Service Pension Scheme (NHS).

Q4. If non associated employers can join, what is the structure of Platinum?

The Scheme is set up under a Trust and administered by Trustees (currently Law Debenture Pension Trust Corporation plc). Unlike most approved pension schemes, Prudential is the Sponsor of the scheme rather than one of the participating employers. The benefits under the trust are listed in schedules, which are the detailed rules pertaining to each type of passport issued by the Government Actuary's Department (GAD). Additional schedules will be added when new passports are available.

Q5. Is there the possibility of a cross subsidy between employers?

Each employer who participates in Platinum will have its own section within Platinum. The contribution rates are set by the Scheme Actuary for each section, the assets are ring fenced for that section, and membership data is identifiable for each contract. There is no possibility of cross subsidy.

Q6. Does this include circumstances if an employer becomes insolvent?

In the event of insolvency, an employer will never be bailed out by another employer from another section of Platinum.

Q7. So what are the benefits of participating in Platinum?

There are a large number of benefits, primarily relating to cost, immediacy and administration. Some of these are:

• Prudential will assist employers during the tendering process by providing details of contributions rates required, including any additional amounts to meet past service shortfalls. This will enable a greater level of accuracy to be available to employers in assessing the cost of running the contract.
• Prudential will allow its GAD passport to be used in confirmation that the employer has a suitable scheme available to meet the 'broad comparability' requirements, subject to the employer giving an undertaking that if it wins the contract, Prudential Platinum will be used.
• The scheme is low maintenance for employers compared with having its own approved pension scheme. There is no requirement for employers to set up their own scheme, involving the expense involved in drafting a Trust Deed and Rules, getting approval for the scheme and appointment of advisers. Furthermore, the renewal of GAD passports annually is within the costs quoted.
• At the end of a contract, employees may transfer between employers without having to stop their membership of Platinum (if both employers participate in Platinum). In practice, this involves a transfer of assets to the new section within Platinum allocated for the new employer.

Q8. How will the Scheme Actuary set the initial contribution rates?

The Scheme Actuary will calculate the contributions required using a reasonably conservative set of assumptions. If an employer wishes to adopt a more conservative set of assumptions, perhaps by investing a greater portion of assets in bonds, then the Scheme Actuary will modify the contribution rates recommended. Employers may not opt for a less conservative basis of funding.

The contribution rate will include allowance for death in service premiums but will exclude running costs. There is a separate table of charges in respect of initial and ongoing costs. The funding basis is available on request.

Q9. How are death in service benefits provided in Platinum?

There is a separate life assurance policy in force with a leading Life assurance company. Life cover must be provided to members as a part of the granting of a Passport, even if it is not underwritten by an insurance policy. For life assurance to be granted, the life assurance provider will require evidence of good health and in certain circumstances may restrict or decline cover. More details can be provided on request.

Q10. Where are contributions invested?

The Trustees will invest assets with Prudential Pensions Limited. The funds selected will be chosen after taking advice from Lane Clark & Peacock who have been appointed specifically by the Trustees to advise them on investment matters.

Q11. If we win a second or more contracts, can we add them to Platinum?

Yes. Platinum may be used for any of the GAD passport arrangements mentioned above. If an associated or subsidiary employer wins the contract, it is at the discretion of the primary employer to decide whether the new contract should be included within the original section, or kept separate. There are cost savings for pooling the arrangements of associated employers together, but we recognise that for some contracts, it may be desirable to keep them separate.

Q12. So what is the process for joining Platinum?

The steps involved are:

• Employer decides to consider bidding for a contract and obtains details of the employees involved in the TUPE transfer.
• Employer provides data to the scheme actuary and signs an undertaking allowing them to use the Platinum passport and agreeing to appoint Platinum if the bid is successful.
• The Scheme Actuary will provide a contribution rate required for the employees to be included within Platinum at the benefit basis appropriate for the contract. The Scheme Actuary may also comment on any shortfall or surplus available for transferring past service benefits.
• If the bid is successful, an application form is completed to join Platinum. Prudential will then arrange for the contract to be included on the basis agreed.

Q13. What happens when the contract ends?

• If the contract is renewed with the same employer, the section can continue without change
• If the contract is won by another employer who participates in Platinum, it is possible for the assets to be transferred and for members to continue as if their service was continuous
• If the contract is won by an employer who is not a Platinum participant, then the benefits may either be frozen within Platinum, or transferred to the new employer's scheme.