The Pension Protection Fund (PPF) has responded to calls from the British Chambers of Commerce (BCC) that the 2010/11 PPF levy be scrapped to effectively save defined benefit (DB) pension-providing companies.

A spokesperson for the PPF told Pensions Age that a group has been set up to help formulate proposals for the levy's future: "We are in the process of developing proposals for the long-term future of the levy and have set up a steering group of leading industry figures to help us formulate those proposals. David Frost, director general of the BCC, has accepted an invite to be part of that group.

"We welcome any views which contribute to this process and we look forward to David's formal contribution to the steering group meetings which will be held between now and the end of the year - and any response by the BCC to our long-term levy consultation when it is published in the New Year."

Earlier this week, the BCC 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.

The PPF spokesperson added: "Our priority, under law, is to pay compensation to those people who risked losing their pensions because their employers have gone bust. We intend to make sure we fulfil our obligations to those people."

However, the PPF did acknowledge the tough financial times that we are in, and told Pensions Age that this had been reflected in their work on the levy: "But, we do recognise that we are living in a difficult economic environment. That is why we announced in June that we would be delivering on our commitment - made in 2007 - to keep the levy stable for three years. This will help reduce the burden on business. We have no intention of changing this decision."

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