UK - The PPF stated 20% of the £575m levy will be raised from all DB occupational pension schemes, regardless of their funding level, and 80% will depend on funding levels of the individual scheme and the risk of insolvency of the employer(s).
On a PPF funding level, if a scheme is less than 104% funded the underfunding risk will be 1% of PPF liabilities. If a scheme can prove it is above 125% funded it will be zero of PPF liabilities.
The PPF stressed no scheme will have to pay a risk based levy of more than 0.5% of its protected liabilities ( a drop of 2.5%).
The insolvency risk of each employer will be calculated looking at the 100 bands under Dun & Bradstreet’s range of failure scores. The insolvency probability will be capped at 15%
Pensions partner of law firm Mayer, Brown, Rowe & Maw LLP, Anna Rogers (pictured) said: “£575 million is a lot of money, but having 100 bands looks fairer between schemes. And the reduction in the maximum risked-based levy is welcome.
However Rogers warned the scheme structure for multi-employer schemes are a bit too simplistic and advice should be sort before completing them The PPF is a statutory body for paying compensation to members of defined benefit schemes (DB) where the employer is insolvent and there are not enough assets in the scheme to pay the set level of compensation.
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