SPP DB committee chair Jon Forsyth
The pensions industry has welcomed the Pension Protection Fund (PPF) decision not to charge a conventional levy but has raised concern it will continue to charge the levy on superfunds.
In its response to the PPF's consultation on its 2026/2027 levy, which closes today (5 January), the Society of Pension Professionals (SPP) said it had "long campaigned" for the PPF to have the flexibility to introduce a zero levy – saying it therefore also supported legislative changes in the Pension Schemes Bill that would allow a zero levy while preserving the PPF's ability to return to a material levy if risks increase.
The SPP response also noted that continued standard contingent asset forms were "a sensible safeguard" – ensuring continuity and clarity for schemes should circumstances change. However, the response goes on to state that the PPF, "should consider ways in which clarity and/or efficiencies could be created to minimise administrative costs".
The SPP response also suggested a review of section 179 valuations and reporting burdens, and warned the superfund consolidator regime "could present challenges for the PPF" particularly for any prospective new vehicles that are not sectionalised and may include non-associated employers.
SPP defined benefit (DB) committee chair Jon Forsyth said: "The SPP has worked closely with the PPF and a range of stakeholders to help ensure the Pension Schemes Bill introduced the necessary flexibility for the PPF to reduce its levy to zero, so we are naturally pleased this is happening.
"Whilst our consultation response highlights our support for a reduced levy, we have also taken the opportunity to highlight a number of issues to help improve administrative aspects of the regime. We look forward to working with the PPF to help achieve these."
In its response to the PPF consultation, The Pensions Management Institute (PMI) was also positive. PMI chief strategy officer Helen Forrest Hall said: "We're pleased the PPF has kept the levy at zero – it's good news for DB schemes and their members. However, we are seeking clarity on how Budget changes to pre-1997 increases might affect future policy. We will work with the PPF and others to keep future measures fair and sustainable."
Levy on superfunds remains
In its response to the PPF consultation, TPT Retirement Solutions said that, while it supported the lifeboat fund's decision to reduce the regular levy to zero, it had "serious concerns" over its decision to continue to charge the levy on superfunds.
Last year, TPT announced its intention to launch a run-on superfund. Since then, reports have suggested a number of other workplace pension providers are also interested in the superfund space.
TPT said the PPF's decision to continue charging the alternative covenant scheme (ACS) levy, which applies to schemes, including superfunds, without a substantive employer covenant does not proportionately reflect the risk superfunds pose.
It said schemes entering superfunds must be able to demonstrate an increased probability of benefits being paid in full – something TPT said meant superfunds represented less risk than regular DB schemes.
Furthermore, TPT said the availability a capital buffer would "put schemes in superfunds in a stronger funding position than regular DB schemes".
TPT said it also opposed a continuation of the ACS levy on grounds of fairness – noting that regular schemes and members will now benefit from the zero levy, but those moving to a superfund will not, despite having paid the levy until the transaction.
TPT Retirement Solutions head of policy and external affairs Ruari Grant said: "The PPF's decision to reduce the regular levy to zero makes complete sense, but there's no reason the same logic can't be applied for superfunds. These schemes are to be held to a very high level by the regulator and will therefore pose minimal risk to the PPF.
"We are aware PPF is wary of future models emerging which may pose more risk, and of the risk were superfunds to reach ‘significant scale'. However, we'd urge them to take a more proportionate approach for the market that currently exists, and remain flexible in future – rather than risking stifling growth and innovation at the outset."
