A scheme to allow British Home Stores (BHS) members to avoid large cuts through the Pension Protection Fund (PPF) could be the first to be assessed under new levy calculations.
On 28 February the regulator and PPF announced they had reached a deal with Sir Philip Green to pay £363m to help fund the creation of a new scheme that will sit outside the lifeboat fund and continue to pay a levy.
A PPF spokesperson confirmed the new pension fund, which will provide better benefits for members than what they would receive in the PPF, would be subject to its proposed levy rule for schemes with no substantive sponsor after a restructuring of benefits.
The lifeboat fund believes its current methodology for calculating levies, which assesses the sponsor's insolvency risk, would not be appropriate for such schemes and should instead be based on the commonly-used pricing model for put options. It comes after the PPF has been concerned about levy payers being directly exposed to the risk of a failed investment strategy where schemes are allowed to run on outside the PPF without genuine sponsors.
It has said the option pricing model is most closely comparable to the risk posed to levy payers by a scheme with no substantive sponsor and would give a fair price.
These plans are set out in a consultation paper publishd last week, which will close to responses on 6 March, and would only apply to such schemes that came into being after the start of this calendar year. However, it has not ruled out applying it to a wider range of schemes in the future.
The PPF wants to finalise the rule in time to complete the 2017/18 levy determination, which will be published by the end of March.
The new BHS scheme will be a fully independent trust to be overseen by three independent trustees, and its creation is expected to take a number of months.
Here is a quick guide to the BHS settlement and the new scheme.
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