PPF confirms levy rules for 2022/23; levy estimate revised down to £390m

The Pension Protection Fund (PPF) has confirmed its final levy rules for 2022/23 and revised its levy estimate down further to £390m.

The rules include the introduction of a limit for 2022/23 that will ensure schemes do not see their individual risk-based levies increase by more than 25 per cent.

Its consultation initially estimated the levy for 2022/23 at £415m, but the pensions lifeboat has since revised it down to £390m.

This represents a reduction of £130m on the levy estimate in comparison to 2021/22.

The PPF’s levy rules confirmed that measures introduced to help schemes and employers with the cost of the levy in 2021/22, including the Small Scheme Adjustment, the lower cap on the risk-based levy and Covid-19 payment easement, will remain in place in 2022/23.

Under these rules, the PPF estimated that more than 80 per cent of schemes that pay a risk-based levy would see their levy fall.

For schemes that do not see a reduction in their levy bill, a new limit will be introduced for 2022/23 only.

This limit will ensure that individual risk-based levies will not increase by more than 25 per cent compared to 2021/22.

The PPF added the limit following its own monitoring, and feedback from the industry and stakeholders, which noted the extent to which forced closure of businesses during the pandemic had resulted in downgrades in insolvency risk scores.

Its estimate of £390m reflects the introduction of the limit, as well as market movements and changes in insolvency risk scores.

“We’re grateful for the positive engagement we’ve received from our levy stakeholders, and are confirming our proposed levy rules which will see the majority of levy bills drop in 2022/23,” commented PPF executive director and general counsel, David Taylor.

“We do however recognise the exceptional nature of the pandemic, and the potential impact of levy increases for a limited number of schemes. Our new and existing support measures are intended to help schemes and employers through this period.”

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