· Levy estimate for 2019/20 will be £500 million, down from £550 million in 2018/19
· PPF launches consultation on draft levy rules for 2019/20
· Changes recently introduced are working well; only minor adjustments proposed to standard levy methodology
· The consultation sets out rules to charge a levy to commercial consolidators
The Pension Protection Fund (PPF) has today announced that its levy estimate (the amount it estimates it will collect) is £500 million for 2019/20 – down from the £550 million estimate for 2018/19.
Last year saw the highest level of claims in PPF history, with further large claims expected in the near future. However, the PPF’s prudent approach to funding has allowed the Board to continue its policy of keeping the levy stable and predictable within each three-year cycle. The levy estimate is £500 million in the next levy year.
A number of new features were recently introduced as part of the more substantial triennial review of the levy. These changes are working well so only minor adjustments are proposed for 2019/20, the second year of the cycle.
The consultation also sets out the PPF’s proposed methodology for levying commercial consolidators. The approach is based on the methodology for calculating a levy for schemes without a substantive sponsor, with adjustments to reflect the specific risks posed by commercial consolidators. The PPF expects its approach to evolve in coming years as the new regulatory framework for commercial consolidators is defined.
Through the consultation the PPF is also:
· Exploring how we can better support schemes to plan levy payments.
· Reminding schemes with certain types of contingent assets to re-execute and certify their agreements on the new standard forms which were published in January 2018. If schemes do not do this they will not receive a levy credit for their asset.
David Taylor, General Counsel at the PPF, commented: “Last year saw the highest ever level of claims on the PPF and we expect claims to remain high for the near-term. However, while we continue to face significant risks and uncertainty, the PPF’s funding position is strong and we’re on track to achieve our long-term funding objective. We’ve therefore been able to leave the levy parameters unchanged for 2019/20 and expect to collect close to £500m. We continue to monitor the situation closely and, as we’ve always made clear, will adjust the levy in future years if necessary to respond to circumstances.
“We are grateful to stakeholders for their ongoing support and engagement and look forward to hearing their views on the consultation.”
The levy consultation will be open until 5pm on 25 October 2018. The PPF will finalise the rules and publish the levy determination in December.
The Pension Protection Fund:
The Pension Protection Fund protects millions of people throughout the United Kingdom who belong to defined benefit pension schemes. If their employers become insolvent and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions. Tens of thousands of people now receive compensation from the PPF and hundreds of thousands more will do so in the future. The PPF is a public corporation, set up by the Pensions Act 2004, and is run by an independent Board.
For further press information contact:
PPF Press Office
020 7566 9775