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| PPF
reveals plans to stick to £700m levy
By Sophie Baker |
| The
Pension Protection Fund (PPF) has announced that its pension protection
levy estimate for 2009/10 stands at £700 million. The levy scaling factor has also been confirmed at 2.22, in advance of the 2009/10 levy year. In August 2007 the PPF promised that its levy estimate would be set at £675 million for the next three years, indexed to wages, as long as no significant change in risk occurred. The decision to keep the same levy estimate as last year was not an easy one, said the PPF, but it believes it was necessary to help reduce the burden on levy payers, particularly during the current economic downturn. The PPF has also published its policy statement which holds minor change to its other 2009/10 proposals, in response to industry feedback during its consultation. One of these proposals relates to the way the PPF calculates levies. Under the current formula, 27 per cent of the PPF’s levy income comes from the 100 schemes with the biggest liabilities, which would rise to 31 per cent under the new proposals if the PPF continues to raise 80 per cent of its levy income from the risk-based levy, and the remaining 20 per cent from the scheme-based levy.  Financial
consultant Watson Wyatt, however, has warned that the 100 largest
pension schemes covered by the PPF could see levy bills rise by up
to 42 per cent over the next few year, adding £79 million to
their annual levy bills.John Ball, had of defined benefit consulting at Watson Wyatt, commented: “The levies paid by the largest pension schemes may become a bigger slice of a bigger pie. Many of these employers face having to pay more into their own pension schemes over the coming years so they would not welcome having to pay more to the PPF as well.” - Pensions Age November 2008 |