UK - The government is "rethinking" how it calculates levies for the Pension Protection Fund following pressure from the UK's largest multi-employer schemes.
The National Association of Pension Funds and schemes such as the £20bn Universities Superannuation Scheme, have held talks with the department for work and pensions in a bid to alter the levy structure.
Their concern is that multi-employer schemes will never derive any benefit from the PPF, despite paying the levy. The USS estimates it will pay at least £2m a year in levies. But it says that for it to make a claim on the PPF, every large university in the UK would have to become insolvent.
The NAPF’s multi-employer schemes working group, which is chaired by The Pensions Trust chief executive Richard Stroud (pictured), has submitted a detailed proposal to DWP officials to make the situation fairer for multi-employer funds.
Although no detail of the proposal can be divulged, this could involve the implementation of a risk-based calculation for these schemes.
Universities Superannuation Scheme chief executive Tom Merchant said:
“It seems quite extraordinary we should have to pay into a scheme where the only way we could ever draw any money out is if the entire university sector became insolvent. “The PPF is another huge cost with no benefit we can derive at all.”
Stroud commented: “This was a concern we pointed out to the DWP and it is rethinking it. We have proposed a detailed solution and the DWP is considering it very seriously. If it does take on the proposals, there is a chance multi-employer schemes will be brought in line with everybody else.”
A DWP spokesperson said: “Any issue regarding the calculation of risk for the risk-based levy will be a matter for the incoming board to decide.
“The board is required by law to consult before setting the levy and, of course, will consider the size and structure of the companies involved as a factor of that risk.”
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