David Taylor, PPF Executive Director responsible for the PPF levy said:
“Our members, levy payers and those protected by the PPF should not be concerned with speculation about our ability to weather the current economic situation. Our latest modelling shows that we are well placed to achieve our self-sufficiency target and our 2020/21 levy estimate remains unchanged from its announcement last year.”
- Our priority is to continue to provide our members with the compensation they were promised, and remain a safety net to those protected by the PPF. Our current modelling shows that we are well placed to achieve this and this is measured by our self-sufficiency target (the ability to pay PPF compensation in full with a 10 per cent buffer).
- We continue to regard any decision to cut member benefits as a matter for the most extreme scenarios only, and not something we foresee.
- Government can choose to adjust the rates we pay to existing and deferred pensioners, but only having consulted and only if the PPF has, in the most extreme situation, already reduced revaluation and indexation to nil. Any suggestion that we are contemplating any reduction to PPF compensation is misleading.
- Any changes to the rates we pay would still need to comply with recent legal judgments including protecting members from falling below Eurostat at-risk-of-poverty threshold.
- We remain confident that our sustainable funding strategy and diverse investment approach equips us well to weather the current market volatility and future challenges.
- Our 2020/21 levy invoices, due to be issued this autumn, have not been impacted by COVID-19. We announced easement measures for any levy payers impacted by COVID-19 in addition to our standard payment plan option.
- We have not yet finalised our 2021/22 levy estimate. We will be consulting in the usual way with levy payers and the pensions industry on next year’s rules later this year.
- The levy we charge is only a very small part of the overall costs of running a defined benefit scheme. To protect schemes as much as possible from significant increases, we use a cap which ensures the maximum levy they can be charged is 0.5 per cent of their liabilities. We recognise that the costs of running a DB scheme can be significant, especially in challenging times, but we’ve yet to find any examples of insolvencies where the levy is stated as a contributing factor, let alone cause, by the administrators. The levy is typically lower, and relatively small, comparative to other scheme costs.
- Any increase to the levy amount we collect overall is limited through legislation to a maximum of 25 per cent on the previous year’s figure.
For further press information contact:
PPF Press Office
020 8406 2107