PPF eyes up legislative change to levy rules

The Pension Protection Fund (PPF) has said that it may ask for changes to pension laws to allow it to be more flexible in setting the levy.

In an upbeat, forward-looking business plan and separate strategic plan published on March 31, 2022, the PPF set out its goals for the next three years.

On the subject of funding, it comments that it is in a strong position which “means we are increasingly well placed to withstand higher levels of claims on the PPF without risking the security of our members’ benefits”.

It goes on to say that – assuming its funding position “remains robust” – it will look to reduce how much levy it collects. “As part of this” the PPF “will identify where legislative change would be helpful to give us more flexibility in charging the levy in the future”.

This could mean that the PPF will ask the Government to revisit current rules restricting the amount by which the levy can increase each year (currently by 25% of the previous year’s estimate). While on the one hand this restriction gives employers some reassurance about expected future levy costs, on the other hand the existence of a restriction may mean the PPF is more cautious about reducing the levy when circumstances allow.

No changes have been confirmed so for now employers and trustees should just keep a look out for developments.

In the meantime the PPF promises to consult on its approach to the 2023/24 levy by the end of October and to publish the final rules by end of January 2023.