The announcement precedes the formal publication of the 2021/22 levy rules in January 2021, and confirms the PPF will:
- implement the small scheme adjustment, which halves levies for schemes with less than £20 million in liabilities and tapers levies for schemes with between £20 million and £50 million of liabilities
- implement the reduction in the risk-based levy cap to 0.25 per cent of liabilities from 0.5 per cent
- continue to measure insolvency risk on the basis in use since April using credit ratings and the PPF specific insolvency risk model operated by Dun & Bradstreet (D&B)
The PPF has also confirmed the levy estimate of £520 million for 2021/22 and that the levy scaling factor of 0.48 will be retained.
David Taylor, Executive Director and General Counsel at the PPF said: “I’m delighted that our levy payers and industry stakeholders overwhelmingly supported the proposals in our recent consultation. We are therefore confirming key decisions now which we hope will help schemes plan for next year.”
The key measures have been confirmed to support levy payers planning to implement risk reduction measures which could reduce the amount of levy they pay before the 31 March deadline.
David Taylor continued: “We hope that these measures will help with affordability while preserving a levy that is risk-reflective and incentivises measures to reduce risk.
“In this difficult year the protection we provide has never been more important. The levy schemes pay is a vital source of funding which allows us to protect members of defined benefit pension schemes in challenging times as well as good.”
The PPF’s policy statement, which will be published alongside the 2021/22 levy rules, will confirm that the PPF will continue to monitor the impacts of COVID on schemes and sponsors and will respond flexibly to any issues arising. The statement will also summarise the consultation responses and the PPF’s conclusions.
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