The Pension Protection Fund (PPF) has today announced that it will not charge a conventional PPF levy this year (2025/26). The move will benefit c.5,000 defined benefit (DB) schemes in the UK, saving them and their sponsoring employers collectively £45m.
When setting this year’s levy rules, the PPF included a provision enabling it to recalculate the conventional levy to zero if appropriate legislative changes were brought forward, and sufficiently progressed, this year.
Since then, the Pension Schemes Bill has been introduced with measures which give the PPF greater flexibility to set the levy. These measures enable the PPF to move to zero levy whilst preserving its ability to reinstate the levy in future if it were ever needed.
The Bill recently passed through Commons Committee stage. The Board, recognising the Bill’s parliamentary progress and the broad support among policy makers and stakeholders for this change, has decided to exercise its provision to move to zero levy for 2025/26. In making this decision at this stage, the Board’s intent was to provide timely clarity for DB schemes and their sponsors, enabling them to better make any associated financial decisions this year.
Moving to a zero levy in 2025/26 marks an important milestone in the PPF’s funding journey. The PPF is in a robust financial position, enabling it to take this decision whilst maintaining strong confidence in its ability to pay current and future members’ benefits.
Minister for Pensions, Torsten Bell said: “Rigid rules currently leave pension schemes paying millions into the Pensions Protection Fund even when extra funding is not required. The Pension Schemes Bill will sweep away those constraints. This will support better funded pension schemes and greater investment by firms.”
Kate Jones, PPF Chair, commented: “I’m pleased that we’re able to save DB schemes £45m this year. The legislative changes we’ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year’s levy. As we reach this significant milestone on our journey to financial self-sufficiency, we recognise the invaluable contribution levy payers have made over the past 20 years. We couldn’t have delivered the protection and peace of mind to members without them.”
Michelle Ostermann, PPF CEO, said: “The PPF plays an invaluable role backstopping the entire DB pension system. It's testament to the PPF’s maturity that we’re now in a position to be self-funding. By moving to zero levy, I’m delighted that we’re directly supporting the government’s pension reforms, delivering savings for schemes and enabling more growth supporting investment.“
The PPF will continue to support policy makers as they consider the Bill in its remaining parliamentary stages. The PPF will engage in due course with industry on its levy plans for 2026/27 which will be informed by the remaining passage of the Bill. The PPF continues to prioritise supporting the government’s consideration of PPF indexation levels, work unaffected by the move to zero levy.
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