Good news. It is not very often that we are able to utter the words “PPF levy” and “good news” in the same breath. However, due to Government plans to increase future PPF compensation in line with the Consumer Prices Index rather than the Retail Prices Index, the good news is that the PPF is formally consulting on plans to reduce the levy estimate by £120 million, to £600 million, for the levy year 2011/12. This should lead to a reduction in many schemes’ levy bills.
Interest. From the levy year 2010/2011 onwards, the PPF will be able to charge interest on levy payments not received in full after 28 days. Further details will be included in the 2010/2011 levy handbook.
Reform. The PPF is also consulting on a reform of the PPF levy formula from 2012/2013. Under the proposals, the PPF’s plans include:
- fixing the levy rules for three years at a time to provide greater predictability – although the rules could be reviewed in exceptional circumstances,
- using average measures for both underfunding and insolvency risk – therefore any temporary fluctuations would not disproportionately affect a pension scheme’s levy bill, and
- focusing more on factors in the levy payers’ control – leading to a greater emphasis on scheme funding and investment risk.
Agenda item 4 – Trustees to note PPF developments and ensure that efficient procedures are in place for checking and paying levy bills promptly so that interest is not incurred.