Joanne Shepard, head of PPF consulting at WTW, said: “Four fifths of eligible schemes are in surplus, while the combined shortfall of schemes in deficit is the lowest it has ever been and almost covered by the PPF’s existing reserves. It is appropriate to reflect this in a lower levy take.
“Projected levy revenues would have fallen by £70m if this year’s rules had been left unchanged, but changes to the calculation are expected to reduce bills by a further £120 million. This is welcome – especially the less dramatic cliff edge effects that schemes will experience when the sponsoring employer moves between levy bands.
“Almost all schemes should see levies fall. But those who pay risk-based levies will typically save a lot more than the well-funded schemes who only pay a scheme-based levy.
“Going forward, the PPF is understandably concerned that the ban on it increasing the levy estimate by more than 25% year-on-year makes it harder to cut levies in the first place. Hopefully, the Government will find time in the legislative calendar to fix this.
“As the PPF says, ‘the most likely outcome for the PPF is that we may end up with more money than we ultimately need’. Starting to discuss how these resources should be used is welcome, if overdue. The strategy has always been to raise more in levies than the PPF expects to need, just in case things turned out much worse than expected. Levypayers have a good argument for saying that they should get some money back.”
Joe Dabrowski, Deputy Director Policy, PLSA, said: “The PLSA has previously called for a lower levy in response to increasingly high levels of PPF surplus and so we welcome the Pension Protection Fund’s announcement that is able to significantly lower its levy as a result of the success of its long-term funding strategy. The PPF’s decision today to announce a reduction in its levy underlines the PLSA’s assessment that, despite recent market difficulties, pension funds remain well-funded and a secure home for savers’ pensions.
“It’s very positive that the PPF is in such a strong place, given its important role in the sector and the wider economic challenges we currently face. As the voice of the pensions industry, the PLSA is looking forward to continuing its close working relationship with the PPF in order to ensure the best outcomes for schemes and, in turn, savers.”
|
