Pension Protection Fund Confirms Levy Changes
18th December 2020
The Pension Protection Fund (PPF) has confirmed changes to the pension levy following a recent consultation.
Ahead of publication of the 2021/22 levy rules in the new year, the PPF confirms it 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.
The IFB has long called for changes to ease the burden on small and family businesses, and supported these changes as part of the consultation process. You can view the IFB response to the consultation here.
In the new year 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.