"Hidden in the small print of the PPF's consultation is a proposal that could have significant implications for sponsors of pension schemes. The PPF is proposing changes to the way that guarantees to schemes, which many organisations use to significantly reduce their PPF levy payment, will be allowed for. In future, the scheme will have to certify that a company providing such guarantees would be able to afford to pay the full amount should it be called upon.
This proposal seems certain to put additional costs on employers. Professional advice may well be required in order to provide the necessary certification. If certification is not, or cannot be given, the levy could materially increase. Our view is that organisations that have provided such guarantees in the past should review their arrangements at an early stage to ensure they will continue to be effective in reducing the levy."
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