A key feature of the levy framework is that the PPF aims for stability, as far as possible, over a three year period (or triennium). 2019-2020 is the mid-point in the current triennium, and the PPF has concluded that the current rules do not need significant changes except in relation to new consolidator funds. The key points to note are:
The PPF has set its levy estimate – the total amount it expects to raise – for 2019-20 at £500 million. This is a drop of £50 million from 2018-19. However, 2017/18 was a record year for claims and claims levels for 2018/19 could be at least as high as last year. The PPF has warned it may need to look at next year's levy rules carefully if claims levels continue to be high, with the implication that levies may rise again.
A previously announced requirement to update contingent asset documentation will come into force in the 2019-2020 levy year.
Contingent assets are assets which become available to a scheme in the event of an employer is insolvency. If the contingent asset uses the PPF standard documentation and meets the criteria for submitting the contingent asset in the levy rules, then the scheme (and its employer) will benefit from a reduction in its levy.
The PPF issued revised standard form agreements for contingent assets in January 2018. The PPF had already indicated that certain schemes – using the old contingent asset documentation – would have to re-execute their agreements for levy year 2019-2020 if they are going to continue to be recognised for reducing the levy.
This applies to contingent assets which include a fixed sum cap (including those where the fixed sum element is within a "lower of" formula). This applies to group company guarantees and charges over cash, land or securities. The new documentation must be submitted by the levy deadlines (expected to be 31 March 2019 for online actions and 5pm on 29 March 2019 for hard copy documents).
The Government's White Paper indicated an intention to bring forward policies to support the consolidation of DB pension schemes. Further proposals are expected in the autumn, but at least two commercial consolidators – The Pension SuperFund and Clara Pensions – have already been launched. The PPF is proposing to introduce new levy rules based on their existing methodology for schemes without a substantive sponsor.
Currently the "overwhelming majority" of levy payers pay their invoices within the 28 day deadline. However, as levy payment has been raised by the Work and Pensions Select Committee, the PPF is consulting on what additional support could be provided to assist schemes with forward planning and payment of levy invoices and whether there is a case for legislative change to allow payment by instalments to become routine.
The Levy Consultation is available here and the consultation closes on 25 October 2018.