UK - Schemes will be able to recoup their Pension Protection Fund levies from members under a new rule added to the Pensions Bill.
The government had insisted that the levy, which has been estimated at around £320m a year or £20 per member, must be paid by the employer. But the new rule will leave it up to trustees to decide if all or part of the costs are passed on to members.
The move follows lobbying by the Confederation of British Industry that members should help pay for the PPF, which is effectively insuring their future pensions.
Department for work and pensions spokesman Stewart Todd said: “No scheme is completely risk-free, so any fund could need PPF compensation in the future. It is therefore reasonable that the members should pay the levy.
“However, it will be left to trustees to judge how the levy charge could be shared as they see fit among employers and employees as one of the overall pension costs.”
He added that the costs to members would be kept quite low.“If people are prepared to pay around £20 for a fortnight’s holiday insurance, it could be argued that a similar amount a year to protect a pension for life is extremely good value.”
CBI pensions policy officer Jay Sheth welcomed the shift in government thinking.
Sheth added: “It is an acknowledgement that employers are facing rising costs and employees should be willing to share the burden, either through the costs of the levy or scheme contributions.”
Aon consultant and actuary Simon Martin agreed.
“It would be helpful if trustees could deduct the money from deferred members without their consent if they cannot be found. This would alleviate any administration headaches the government was concerned about.”
Asset managers failing to 'fulfil purpose'; Industry needs focus on systemic risk and a 'do no harm' Hippocratic Oath for practitioners
The asset management industry is failing to fulfil its purpose because of an overreliance on modern portfolio theory, which has not evolved to meet current challenges, latest research claims.
The Brunel Pension Partnership has become the fourth local authority pool to receive the green light from the regulator.
Defined benefit (DB) schemes are to be offered a new consolidator as the former chief of the Pension Protection Fund (PPF) launches 'The Pension SuperFund'.
Martin Freeman has been hired as head of technology product and development at Smart Pension, to support the 'growing' technology product side of the business.