PPF Event - 1992 ISDA Provision
1992 ISDA Master Agreement
Section PPF Event in full
Related agreements and comparisons
Resources and navigation
Content and comparisons
The Pension Protection Fund protects UK Pension Schemes upon their insolvency. This is of particular interest where a UK Pension Fund is party to an ISDA Master Agreement, because the PPF has wide discretionary powers to set aside contracts it doesn’t like and that can play havoc with your close-out netting analysis.
As a result much discussion around an Additional Termination Event specifically targeted at UK Pension Funds. See, for example, the PPF’s proposal — rather crappily drafted, we are bound to say — for a PPF Event ATE. (Note, unusually, they have decided that Party A is the Pension Fund, and not Party B, as will be most dealers’ preference (and generally the dealers prepare the docs).
“A solution was proposed from within the industry suggesting the inclusion of standard wording in agreements between the trustees and counterparties, without involvement of the PPF at that stage, and a consultation with stakeholders was commenced in March 2009. Following discussions with stakeholders, the following wording is proposed: [see panel]
We would strongly encourage trustees and managers to adopt this wording in ISDA contracts which they enter into or which are entered into on their behalf by their fund managers.”
- The drafting is lax here: not clear whether this is designates an Early Termination Date or actually completes termination of all Affected Transactions.
- The drafting assumes the Pension Fund is Party A. Usually it will be Party B.