PPF levies set to fall by 3% after drop in employer insolvency risk
The Pension Protection Fund has revealed its levy estimate for schemes in 2016/2017 will total £615m, down from £635m the previous year.
In a consultation paper, the lifeboat fund said while it predicts funding levels to have fallen since 2015/16, they will have been offset by a lower risk of employer insolvencies.
It intends to keep its rules substantially the same, and confirmed that Experian scores will be used between April 2015 and March 2016. The most significant changes are to simplify reporting requirements on schemes rather than to alter the methodology.
General counsel David Taylor said the levy reduction reflects improvements in the Experian scores that scheme employers and guarantors are receiving, balanced by a deterioration in smoothed scheme funding.
The consultation is open from now until 22 October and the results are expected to be published before the end of the year.
Despite the reduction in the total levy, Barnett Waddingham head of corporate consulting Nick Griggs warned some employers could face higher individual levies. He urged employers to check the information held by Experian and on the annual scheme return to ensure they are not paying more than their fair share.
The PPF makes some changes to the rules and guidance over certification and re-certification requirements for mortgage exclusions and asset-backed contribution arrangements.
It will run regional interactive half-day seminars on contingent assets for trustees, employer representatives, and professional advisers. These seminars will provide an introduction to the issues raised in certifying Type A contingent assets for recognition in the levy.
Griggs said these changes should reduce the burden on employers, but that they should be aware that immaterial mortgages will still need to be recertified.
A more detailed review of the levy will be carried out in 2017/18 for later years, where a key consideration will be the impact of moving to the new accounting standard FRS 102. Given that this change could result in a higher levy for multi-employer schemes, Griggs said employers may want to investigate the potential impact as early as possible.
Further reading:
Read about the PPF's six changes to its levy rules here
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