TPT Retirement Solutions (TPT) has raised “serious concerns” over the Pension Protection Fund’s (PPF) decision to continue charging a levy on superfunds, despite cutting the regular levy to zero for 2026/27.

In its response to the PPF's levy consultation, which closes today, the workplace pension provider welcomed the move to reduce the standard levy in light of the PPF’s £14bn surplus, but questioned the rationale for maintaining the Alternative Covenant Scheme (ACS) levy.

Last year, the PPF confirmed that it had recalculated the 2025/26 levy following progress on the Pension Schemes Bill, which included measures to provide greater flexibility in how the levy is set.

It said its continued reserves, alongside further improvements in scheme funding, meant there was no need to charge a material levy, with financial security instead expected to be built primarily through investment returns.

However, the PPF also warned that retaining a zero levy in future years was dependent on the levy measures passing through the remaining substantive stages of the bill, with timings at this stage still unclear.

In response, TPT argued that continuing to apply the levy does not proportionately reflect the level of risk posed by such arrangements to the PPF.

The ACS levy applies to schemes without a substantive employer covenant that are instead backed by a capital buffer, including superfunds.

TPT highlighted that schemes entering a superfund must demonstrate an increased probability that members’ benefits will be paid in full, meaning superfunds “by definition” represent less risk than traditional defined benefit (DB) schemes.

It also argued that the presence of a capital buffer placed schemes in a stronger funding position than regular DB arrangements.

Meanwhile, the provider raised concerns around fairness, arguing that while regular schemes and their members will benefit from a zero levy, those transferring into a superfund will continue to pay, despite having already contributed to the levy that helped build the PPF’s current surplus.

As a result, TPT warned that retaining the ACS levy risked making superfund transactions more expensive for schemes, sponsors and members.

Commenting on the consultation, TPT Retirement Solutions head of policy and external affairs, Ruari Grant, said the decision to reduce the regular levy was justified, but questioned why the same approach could not be applied to superfunds.

“These schemes are to be held to a very high standard by the regulator and will therefore pose minimal risk to the PPF,” he stressed.

Grant acknowledged concerns about the potential for riskier models to emerge in future or for superfunds to reach significant scale, but urged the PPF to take a more proportionate approach to the current market and remain flexible over time, warning that an overly cautious stance could stifle growth and innovation at an early stage.

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