Scheme Assessment
Before a scheme can enter the PPF it has to go through a period of assessment, which must last a minimum of one year. Entry to the assessment period is triggered by a qualifying insolvency event. During assessment a valuation is carried out of the scheme's assets and liabilities. If this valuation finds that the scheme can afford to purchase annuities for members at or above the level of compensation the PPF would provide, then the scheme leaves the PPF assessment to wind up independently. If the scheme cannot afford to purchase such benefits for its members, the assets of the scheme transfer into the Fund and the Board takes over responsibility for paying compensation to members. This process is more complex if the company is a multinational company. In October 2011, the Court of Appeal ruled that Nortel Networks £2.1 billion pension debts should be considered as "administration expenses" rather than an unsecured creditor claim. US courts are likely to regard the claim as dating from the moment of underfunding rather than the administration date and hence the regulator is thought unlikely to be able to recover assets in the US.
Read more about this topic: Pension Protection Fund
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