The Pension Protection Fund plans to raise £5m with a Fraud Compensation Levy in 2017/18 as it expects a number of possible claims over the next few years.
It is the first time the lifeboat fund has collected a fraud compensation levy in five years. The levy will raise money for the Fund Compensation Fund, which the PPF runs. In order to smooth the impact to schemes over time the PPF will raise a levy of 25p per member.
The FCF pays compensation to eligible work-based pension schemes, including DC schemes, where the employer is insolvent and the scheme has lost out due to offences involving dishonesty.
It was established under the Pensions Act 2004 to provide compensation to occupational pension schemes, with insolvent employers, that suffer a loss that can be attributable to an offence involving dishonesty. It came into effect in September 2005, and replaced the Pensions Compensation Board.
The PPF said it will keep the levy under review for future years. The levy is collected by The Pensions Regulator alongside its general levy. The collection process began on 1 April.