UK - The PPF levy is a potential crippling additional cost to some pension schemes, according to the latest annual pension schemes administration survey by Capita Hartshead.
Almost 74% of schemes said the highest increase in overheads were down to pension scheme management costs. An average increase of 20% was attributed directly to the raised PPF levy, but this rose to an additional 75% in added-on costs for some schemes.
The report stated: “Given the claims on the PPF, it can only be expected that the average levy sought will continue to rise over the year ahead.”
The survey also showed a huge 59% of surveyed companies closed defined benefit schemes to new entrants, up 4% on last year with around 64% opening defined contribution schemes.
A spokesman for the PPF countered that any risk-based levy such as this would be expected to behave like insurance with higher risk equalling higher premiums.
He added: "We have to ensure we have the funds to protect pensions and to provide compensation. To put this in context, £675m (US$1.3bn) represents just 2% of all employer contributions or 0.9% of all scheme assets."
A massive 63% of schemes said recent reforms would accelerate the closure of existing, better schemes in favour of new government plans.
The survey continued that under a third of schemes felt simplification, the Pensions Act 2004 and new age discrimination rules had been beneficial for either schemes or the pensions industry as a whole.
Around 90% said legislative changes had failed in helping member take-up or simplifying administration.
Worryingly for the government, 66% did not believe the changes had improved financial security which was one of the principal aims of the Pensions Act 2004.
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