In our Long-Term Funding Strategy review, published today, we’ve set out a revised funding objective and new priorities. As we enter a new stage of our funding journey, we’re now able to reduce the total amount of levy we charge without risking the long-term security of our members’ benefits.
Our funding strategy has always been critical to us fulfilling our ultimate goal – to pay all our members their compensation for life. We’ve made significant progress in recent years towards our funding goals, with strong investment performance helping strengthen our financial position. This, together with our changed risk profile, means we can now shift our focus from building to maintaining our financial resilience. In our Long-Term Funding Strategy review we’ve set out fresh funding priorities and a new ‘Financial Resilience’ target.
Oliver Morley, our Chief Executive Officer, said: “We’ve made rapid progress on our funding journey in recent years and are further ahead at this point than we expected to be, largely through the excellent performance of our investment approach. We are close to achieving our Financial Resilience target, meaning we can now start to actively take steps to bring down the levy without risking our members’ benefits.”
As outlined in our levy consultation, which also opens today, this means we expect to collect £200 million in levy next year (2023/24), a near halving on the amount we’re looking to collect this year. Almost all our levy payers will be paying less levy next year.
“We’re able to share the positive impact of our strengthened position with the 5200 schemes, and 10 million members, protected by us. We hope that schemes will use the reduction in their levy payments to further strengthen the position of their own scheme and improve the outlook and security for their members,” said Oliver.