1Liquid Capital Requirement = Initial Capital Requirement + Capital Surcharge Calculation of Initial Capital Requirement ICR = (√AUA) x K1 |
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Where |
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ICR |
means Initial Capital Requirement |
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AUA |
means Assets Under Administration calculated as the sum of the most recent annual valuations over the preceding 12 months of the personal pension schemes administered by the firm, and adjusted to include any revaluation of assets that may occur between the date of the most recent annual valuation and the date when the firm must calculate its AUA. A firm must calculate its AUA quarterly in line with the dates when it has to submit its regulatory capital reporting form in accordance with SUP 16.12 (Integrated Regulatory Reporting). Where it is not possible to value an asset (for example because there is no readily available market price), the most recent market valuation should be used. Where it would be reasonable to assume that the value of the asset has changed by more than 15% since the most recent market valuation, a firm should instead use a reasonable estimate. This is without prejudice to any requirement on a firm to provide a personal pension scheme member with accurate and timely valuations of their portfolios. |
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K1 |
is set subject to the firm’s AUA as specified in the below table: |
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AUA |
K1 constant to be applied |
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<£100m |
10 |
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£100-£200m |
15 |
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>£200m |
20 |
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When K1 changes due to an increase in AUA, in accordance with the thresholds in this table, the firm must apply the new K1 value within six months following the date on which its AUA exceeded the threshold of its previous K1 value. |
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Calculation of Capital Surcharge |
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CS =(√P) x K2 x ICR |
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Where |
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CS |
means Capital Surcharge |
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P |
means the fraction of personal pension schemes administered by the firm which contain one or more asset types which do not appear in the list of Standard Assets below, at the most recent quarter end. For example, if a quarter of personal pensions contained non-Standard Assets, this would be inputted in to the formula as 0.25. |
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K2 |
is set at 2.5. |
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ICR |
means the Initial Capital Requirement calculated as above. |
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Standard Assets The List of Standard Assets is as follows (subject to Note 1): Cash Cash funds Exchange traded commodities Government & local authority bonds and other fixed interest stocks Investment notes (structured products) Shares in Investment trusts Managed pension funds National Savings and Investment products Permanent interest bearing shares (PIBs) Physical gold bullion Real estate investment trusts (REITs) Securities admitted to trading on a regulated venue UK commercial property Units in Regulated collective investment schemes |
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NOTE 1: |
A Standard Asset must be capable of being accurately and fairly valued on an ongoing basis and readily realised within 30 days, whenever required. |
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NOTE 2: |
In addition to complying with the provisions of IPRU-INV 5.8, in accordance with IPRU-INV 5.3.2R, a firm must hold its liquid capital in financial resources as follows: |
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ICR |
realisable within 12 months; and |
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CS |
realisable within 30 days |
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Related provisions for GENPRU 2.2.175
161 - 180 of 205 items.
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