Pensions - Articles - Law change needed to allow deeper cuts in PPF levy

 However, PPF makes it clear in its consultation that it is reluctant to cut the levy any further because it is prevented by law from increasing the levy in future by more than 25% in any one year. This rule means that, for example, if the PPF thought it no longer needed a levy and set it at zero one year, it would be unable to reinstate the levy. More generally, if it cut the levy to a very low level, it could only be brought back to a meaningful level over a period of several years.

 In response, LCP partner Steve Webb has called for a change in the law to give PPF greater flexibility. This would allow it to cut the levy now at a time when PPF funding is in robust shape but with the comfort that the levy could be raised again if the situation deteriorated.

 Commenting, Steve Webb said: “The PPF is a success story and its finances are now in robust shape. Whilst a proposed cut in the levy on employers from £200m to £100m is obviously welcome, it is clear that PPF would like to go further but is constrained by the law. It is highly undesirable that PPF Is being forced to charge employers more than it needs to, simply because of the lack of flexibility to increase the levy again in future if needed. The Government should change the law to allow deeper cuts now, which would be a boost to British industry without undermining the funding position of the PPF”.