On 24 May 2007, the Pension Protection Fund released a statement confirming that it will not include investment strategy as a separate risk factor in relation to the risk-based levy. Back in December 2006, the PPF completed a consultation with the pensions industry on whether to include an investment element in the risk factors taken into account by the PPF when calculating an eligible scheme’s liability to pay the risk-based levy. At that time, the PPF was of the view that introducing an investment-related factor into the risk-based levy was inappropriate.
It said that the cost impact this was likely to have on pension schemes would be disproportionate to the 3% reallocation of the levy it would cause. Those who responded to the PPF’s consultation exercise tended to agree. 60% of respondents were against introducing investment strategy as a risk factor at this point in time. The majority of respondents agreed that the impact of investment strategy was limited, although they did believe that the PPF should monitor trends regarding the impact of investment strategy on the risks posed to the PPF.
The PPF’s statement is available at www.pensionprotectionfund.org.uk/news-details.htm?id=5873.