PPF sets next levy estimate at £500m

The Pension Protection Fund has set its next levy estimate at £500m for 2019/20, a drop of £50m on the 2018/19 estimate.

The lifeboat fund has launched a consultation on the draft levy rules for 2019/20, which will be the second year in the current three-year levy cycle. It said that last year the PPF saw the highest level of claims in PPF history, with further large claims expected in the near future. However, its funding approach has allowed it to keep the levy stable.

The consultation sets out the PPF’s proposed methodology for levying commercial consolidators. The approach is based on the methodology for calculating a levy for schemes without a substantive sponsor, with adjustments to reflect the specific risks posed by commercial consolidators. The PPF expects its approach to evolve in coming years as the new regulatory framework for commercial consolidators is defined.

In addition, the consultation explores how the PPF can better support schemes to plan levy payments, and remind schemes with certain types of contingent assets to re-execute and certify their agreements on the new standard forms which were published in January 2018. If schemes do not do this they will not receive a levy credit for their asset.

Commenting, PPF general counsel David Taylor said: “Last year saw the highest ever level of claims on the PPF and we expect claims to remain high for the near-term. However, while we continue to face significant risks and uncertainty, the PPF’s funding position is strong and we’re on track to achieve our long-term funding objective.

“We’ve therefore been able to leave the levy parameters unchanged for 2019/20 and expect to collect close to £500m. We continue to monitor the situation closely and, as we’ve always made clear, will adjust the levy in future years if necessary to respond to circumstances."

The levy consultation will be open until 5pm on 25 October 2018. The PPF will finalise the rules and publish the levy determination in December.”

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