UK - The Pension Protection Fund (PPF) has set its levy estimate for 2007/2008 at £675m - more than double the £324m the fund is expected to collect for 2006/2007.
The PPF has said the increase would help make up for the undercollection this year and reduce the organisation's deficit, which stands at £343m.
A spokesman for the PPF said although last year's levy estimate was set at £575m, the actual amount collected during this financial year was likely to be around £324m.
PPF chief executive Partha Dasgupta commented: “Last year, we collected less money than we had originally anticipated because of market movements, improvements in the quality of data, direct action by schemes to reduce their risk and as a result of fixing the process for distributing the levy between schemes. Going forward we will need to collect a levy nearer our original estimate.
“Now that more detailed information on schemes is available through the Purple Book published earlier this week, we have decided that a 1.25% cap on how much an individual scheme pays in risk based levy strikes the right balance between continuing to protect weaker schemes and not penalising stronger schemes which subsidise them.”
Despite giving the PPF's announcement a "qualified welcome", Watson Wyatt senior consultant Stephen Yeo had some reservations: "Surely the time has now come to question whether the benefits paid by the PPF should be held in check, so that the cost can be kept at the level parliament intended.
"The PPF was set up on the basis that the long-term levy would be £300m a year and at that level the whole package of changes was said to be cost neutral... The PPF Board has the power to hold back increases to the benefits it pays and it should do that rather than increase the levies so far above the level first envisaged."
However, in a contradictory response, independent pensions adviser Ros Altmann, who "warmly welcomed" the announement, and said the PPF levy calculations were "prudent" and "entirely sensible".
"Firms should not complain too much about paying some more this year as they paid far less than they should have done last year. We must not forget that this is about members of schemes who are relying on their company pension for their retirement security (given that state pensions are so low) and it is long overdue that we have a proper protection mechanism in place.
"Tens of thousands of lives have been blighted by the lack of insurance in the past and this could not be allowed to continue. Even with sophisticated fire alarms and sprinklers, people do not leave their house uninsured."
The 2007/2008 PPF levy estimate is open to consultation until 2 February 2007.
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