A 'contingent asset' is an asset that will produce money for a pension scheme if a specific event occurs, such as an employer becoming insolvent. Contingent assets reduce the risk of an insolvency event resulting in a claim on the Pension Protection Fund and can be recognised in the PPF's levy calculation if certain requirements are satisfied. The types of contingent assets recognised for this purpose are:
Type A - Parent or group company guarantees
Type B - Security over cash, UK real estate and securities
Type C - Letters of credit and bank guarantees.
Contingent assets, once registered with the PPF, need to be re-certified every year in order to be taken into account for levy purposes.