The Pension Protection Fund's (PPF) levy for 2010/11 should be scrapped immediately, according to the British Chambers of Commerce (BCC), as a solution to the problems it is causing for firms that offer defined benefit (DB) pension schemes.

The BCC has published research highlighting the serious implications the levy has for companies with DB schemes, which originally cost them £300 million per year. However, for 2007/08 this amount rose to £675 million, and the current figure is £700 million.

The BCC argued that businesses no longer have to offer DB schemes, but some do so to show that they value their employees. There is, however, a danger that the levy could force DB schemes to close at an even quicker rate, eventually forcing them into insolvency.

"We are deeply concerned by reports of large and unexpected increases in the PPF levy, which threatens to undermine the viability of many businesses," commented David Frost, director general of the BCC. "There is a risk that with DB schemes closing fast, the pensions gap that already exists between the private and public sectors will be even greater.

"The levy needs to be responsive to the economic situation. We cannot lose production businesses offering good retirement benefits because of this levy. This could hamper the private sector's ability to drive the UK out of recession and into a sustainable recovery."

Peter Heginbotham, president of Greater Manchester Chamber of Commerce, added: "The PPF levy is deeply flawed and risks undermining otherwise healthy businesses. In Manchester, many businesses have been severely affected by it. We are calling for reform to make the levy more predictable, more transparent and less burdensome for struggling businesses. This will help companies get through unprecedented economic times - while honouring their own pension obligations - and stop them from being forced unfairly to cover the obligations to others as well."

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