The Pension Protection Fund (PPF) has revealed that its levy estimate for 2025-26 has been lowered to £45 million, less than half the original proposal of £100 million, which was also the amount collected in 2024-25.
The estimation reflects the fund’s healthy surplus and means the levy will be the lowest ever, with 99.7 per cent of all defined benefit (DB) schemes expected to see a reduction, according to the PPF.
A new provision has been included in the levy rules enabling the PPF board to calculate a zero levy if “appropriate legislative changes that would give us this greater flexibility in setting the levy are brought forward”, the fund says. Current rules restrict any increase on the previous year’s levy to a maximum of 25% – clearly set at a time when there was no real expectation of a reduction being likely.
The levy protects close to nine million members belonging to around 5,000 pension schemes. If an employer collapses and its DB pension scheme cannot pay members what they were promised, the PPF pays compensation for their lost pensions.
The levy also forms a part of the financing of the PPF, together with funding from returns on its investments, the assets from pension schemes transferred into the PPF, and recoveries from insolvent employers.
Action required – important deadlines
Levies are based on scheme data submitted to the Pensions Regulator in the annual DB and hybrid scheme returns, due by midnight on 31 March 2025.
For schemes where the sponsor is paying deficit reduction contributions (DRC), these can be certified at any time up to 5pm on 30 April 2025 and will be counted as additional assets to reduce a scheme’s risk-based levy.
Contact for further information
To discuss any issues facing your scheme, please contact us:
Tel: 01423 229029 Email: info@sandccarsalesharrogate.co.uk
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