The insolvency event starts an assessment period, during which the scheme is considered to see if it meets the criteria for entry into the PPF. The PPF aims to complete this within two years. During the assessment period, the trustees remain in day-to-day control of the scheme, however:

• no new members can be admitted, no further benefits earned and no transfer values paid;
• benefits can be paid under the scheme but only to the level of PPF compensation;
• the PPF can intervene in the management of the scheme and give directions to the trustees;
• the PPF will review any ‘moral hazard’ issues;
• the PPF will also review any recent (typically within the three years prior to the assessment date) rule changes, ill-health early retirements and discretionary increases granted which may lead to an increase in PPF compensation; and
• the PPF will instruct the scheme actuary to carry out an actuarial valuation as at the day before the assessment period started (a Section 143 valuation).

A Section 143 valuation is carried out to determine whether there are insufficient assets within the scheme. This valuation is based on the theoretical cost of buying out the scheme’s benefits with an insurance company and the provision of the PPF compensation entitlement to each member.