What is the levy and who pays it?

Similar to an insurance premium, the amount of levy each scheme pays is primarily based on the risk of its sponsoring employer becoming insolvent. A small portion of the levy we collect is based on the size of the scheme.

Almost all defined benefit occupational pension schemes, and schemes that have defined benefit elements, are eligible.

The framework for the levy rules is set out in legislation (Pensions Act 2004). We review and consult on how we apply these rules each year.

Dun and Bradstreet (D&B) will generate insolvency risk scores for 2021/22 levies onward. Experian will continue to offer customer support for historic scores pre-dating April 2020.

The levy is made up of the scheme-based levy and the risk-based levy. Here we explain how we calculate each component.