UK - The Pension Protection Fund (PPF) is set to take investment strategy and credit risk into account when calculating risk-based levies.
The proposals - which will be subject to a three-month consultation to be published later this month - will continue to recognise the short term risks that schemes pose to the PPF in order to be able to meet the claims that it expects to face at any one time.
They will also add a component to the risk-based element of the levy to reflect a scheme's contribution to the long term risks the PPF faces, even from well-funded schemes, in a bid to take on board a scheme's investment strategy and credit risk over time.
In addition, they will provide the potential to reduce the scheme-based element of the levy, and offer greater year-on-year stability in individual bills, in order to make the levy less sensitive to short term changes in insolvency ratings and levels of underfunding.
Martin Clarke, director of financial risk at the PPF, told delegates: "When we first introduced the levy, we tried to make it simple as its implementation represented a major challenge for us, particularly as we had limited information about the risks we were exposed to.
"We now have a far better understanding of those risks - and this has led to a recognition that we need to achieve greater fairness when we calculate the levy.
"We put forward some of our initial thinking last year. We have now developed that thinking and we will be announcing proposals later in October which we believe will make the levy fairer - and help provide the stability in individual bills that levy payers are calling for."
Clarke added: "We have received much welcome expert advice and support in developing these proposals. We now want to hear what all interested parties have to say and urge them to respond to our consultation when it is published."
The full proposals will be published in October for a three-month consultation.
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