The government should take advantage of the new Pension Schemes Bill to abolish the Pension Protection Fund (PPF) administration levy and permit the PPF to cover its operating costs through its own fund and “substantial” surplus, Pension UK has said.

The call was made in response to the recent decision by the Department for Work and Pensions (DWP) to re-bill defined benefit (DB) pension schemes with assets over £15m for the administration levy.

Pensions UK raised concerns around this recent move, implemented over the past few weeks following a two-year hiatus, arguing that the sudden reintroduction of this levy has raised process concerns and left many facing “significant unbudgeted” costs.

It also warned that this move risks undoing some of the “very welcome” benefits of reforms in the Pension Schemes Bill, which include allowing the risk-based PPF levy to be reduced to zero.

Currently, legislation only allows PPF and FCF administration costs to be met from the administration levy, which is collected separately from the general levy on pension schemes by The Pensions Regulator (TPR).

TPR collects the fee and passes it to the DWP, which then provides a grant to the PPF to cover a portion of its administrative expenditure.

TPR said the administration levy was paused following the build-up of a surplus, resulting in its collection being suspended for two years from 1 April 2023.

Since then, the surplus has reduced and after a two-year hiatus, collection of the administration levy was restarted from 1 April 2025, which TPR said was “to ensure sufficient funds are available to meet PPF's administration costs”.

Following an independent review of the PPF in 2022, the administration levy was found to be “an unnecessary complication for both the PPF and its stakeholders”, and the review recommended it was abolished once the PPF’s surplus was spent.

The association is therefore asking the government to take the opportunity to implement these recommendations in the Pensions Schemes Bill.

Pensions UK director of policy and advocacy, Zoe Alexander, said there “clearly” has been a breakdown in the process around the re-introduction of the PPF administration levy.

She said that Pensions UK welcome the government’s efforts in the Pension Schemes Bill to reduce the risk-based PPF levy to zero but emphasised that “now is the time” to grasp the opportunity presented by the bill to also implement the “outstanding recommendation” of the 2022 review of the PPF and abolish the administration levy. 

Earlier this year, when the PPF published its strategy for the next three years, it said it would consider the necessary changes to the industry-funded PPF administration levy, which is in line with the recommendation for its abolition, acknowledging that the PPF is now in a position to be self-funded.

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