PPF makes early announcement on 2010/11 levy

PPF chief executive Alan Rubenstein told delegates at the Confederation for British Industry annual pensions conference this fulfils a commitment made in August 2007 when the PPF said that it would keep the levy estimate stable for three years.

The announcement on the levy estimate has been made earlier in the year than normal to help ease the continuing economic uncertainty faced by employers and pension schemes which have to pay the PPF levy.

Rubenstein said: "Despite the economic climate deteriorating considerably since last year, we believe it's important to stick to our commitment made in 2007 to keep the total amount of levy we aim to collect stable for three years.

"While pension schemes won't be able to calculate their individual levy bills until later in 2009, we felt it was important that we recognise now the financial difficulties that many employers and pension schemes are experiencing and to reassure them that we won't be raising in real terms the total levy we want to collect during 2010/11.

"But it is important for us to again make clear that, while we want to relieve some of the burden faced by employers and schemes during the recession, we will consider in the future raising the amount of levy we collect above the rate of inflation, if necessary, to meet our commitments."

Rubenstein also reassured members of schemes who have transferred to the PPF, or might do so in the future, that this announcement does not affect the PPF's ability to pay the compensation they are due.

The PPF said it currently has assets of almost £3bn and has more than enough money to make compensation payments.

The PPF will confirm the actual levy estimate when the Office for National Statistics publishes wages indexation figures in September.

Schemes will be able to work out their individual levies when the PPF announces the levy scaling factor - the mechanism used to calculate bills - also in the autumn.

The Pensions Act 2004 restricts the amount that the levy can be increased by in any one year to 25% of the previous year's estimate, to a levy ceiling which for the current year 2009/10 is £863,412,967.

The levy ceiling is increased by the government each year in line with wages inflation.