The Pension Protection Fund has confirmed that the levy it expects to collect for 2019/20 will be £500m, a drop of £50m on 2018/19.
The confirmation follows a consultation by the PPF launched in September. It also confirmed that the levy rules will remain largely unchanged from the proposals set out in the consultation, as the majority of respondents supported the PPF’s view that the core methodology is working well.
The consultation also set out the PPF's methodology for calculating a levy for commercial consolidators. Responses have helped the PPF refine proposals to establish a workable rule for 2019/20. The PPF’s approach will develop in subsequent years as the market and regulation take shape.
Commenting, PPF executive director and general counsel, David Taylor, said: “This policy statement confirms our plans for the levy in 2019/20, the second year of our current three year cycle. As one of the PPF’s four sources of funding, the levy continues to play a vital role in our funding strategy. Despite significant risks, we’re on track to meet our long-term funding target, which means we can set the levy at this level.”
Taylor also expressed his gratitude for the feedback the PPF received from stakeholders: “We’re pleased that respondents were generally supportive of our approach, and there was specific feedback on certain areas that has been reflected in the final rules.
“In particular we’ve taken on board comments around our approach to commercial consolidators. The Department for Work and Pensions and The Pensions Regulator outlined their approaches last week; the levy rule we are publishing today dovetails with this. Our thinking on this will continue to evolve as the regulatory framework becomes clearer, but feedback has helped us establish a workable, risk-reflective rule for the 2019/20 levy year.”
Furthermore, he said consultation responses have also helped the PPF identify some immediate steps it can take to improve support to DB pension schemes generally in relation to paying the levy.
“We will continue to engage with them as we explore some of the longer term options,” Taylor said. A full list of the relevant deadlines for the 2019/20 levy year has been published alongside the Levy Determination.
Pension scheme trustees and employers can log on to view and check their insolvency data and scores at: www.ppfscore.co.uk.