The Pension Protection Fund (PPF) has released its response to the August 2007 Pension Protection Levy Consultation. It has sought to stabilise the PPF levy over the next three financial years. The PPF revealed that its levy estimate for 2008/09 is £675 million and, subject to a major change in the level of risk posed to the PPF, the estimate is expected to remain stable for 2009/10 and 2010/11, although it will be indexed against average earnings.
Furthermore, in an effort more accurately to reflect the long-term risks schemes pose to the PPF and as an incentive for schemes to reduce their risk, the PPF has raised the funding level for the payment of a reduced levy from 104% to 120% and the funding limit for schemes to pay no risk-based levy at all from 125% to 140%. In addition, to protect the weakest 5% of schemes from disproportionately high invoices, the levy cap has been reduced from 1.25% to 1% of liabilities.
The NAPF has welcomed the PPF’s efforts to stabilise the levy over the next three years and to allow employers to get credit for later deficit-reduction payments. However, the NAPF also emphasised that the balance between levies for well-funded and under-funded schemes must be kept under review to ensure fair treatment. We will shortly be publishing a detailed briefing on the development of the PPF levy.
View the response
View the press release