The DWP has published the draft Occupational Pension Schemes (Levy Ceiling) Order 2009 (the Order), which specifies the PPF levy ceiling for the financial year beginning on 1 April 2009 at a level of £ £863,412,967.
Under the Pensions Act 2004, the secretary of state for work and pensions (currently James Purnell) has the power to increase the PPF levy ceiling in order to reflect what he considers has been the rate of earnings inflation. The Occupational Pension Schemes (Levy Ceiling - Earnings Percentage Increase) Order 2009 specifies that the increase in the general level of earnings for the period of 12 months ending with 31st July 2008 is 3.6 per cent.
In our December 2008 update we reported that the PPF had set a pension protection levy estimate of £700 million for 2009/10, in line with its commitment made in August 2007, when it set a levy estimate of £675 million for the next three years, indexed to wages, so long as there was no significant change in risk. While the levy ceiling indicates the amount of levy the PPF could impose on schemes without seeking Treasury approval, the PPF’s confirmation in 2008 of a requirement for £700 million in 2009/10 should mean that this year’s levy bills are unaffected by the ceiling amount. However, some industry bodies are sufficiently concerned about the decision to allow the levy ceiling to rise by 3.6 per cent to have recommended that companies in financial distress be granted temporary amnesty from paying PPF levies.
View the draft Order