• Levy rules for 2017/18 to remain largely unchanged for third year of the triennium
• PPF details rules around new UK accounting standard FRS102
• PPF may consult further on approach to charging a levy to schemes with no sponsoring employer
• PPF due to consult on next triennium in spring 2017; work well underway
Following the consultation launched in September, the Pension Protection Fund (PPF) today (Thursday) confirmed its planned levy rules for 2017/18.
The PPF also confirmed the levy estimate of £615m, originally published in September 2016 and unchanged from 2016/17.
David Taylor, Executive Director and General Counsel at the PPF, commented: “The levy remains an important source of funding for the compensation we provide and we recognise how important our levy payers are in protecting people’s pensions. This policy statement confirms our plans for the 2017/18 levy, the final levy year of the current three year period.
“We thank stakeholders for their feedback and conclude that overall the model is working well. While there are some steps that could be taken to improve it further, we believe the appropriate point to review and potentially update aspects of the model is for the next triennium. Therefore, consistent with our goal to keep the rules stable over three year periods, we are making only limited changes for 2017/18.”
The changes for 2017/18 include a mechanism for stakeholders to notify Experian, the PPF’s insolvency risk services partner, where the move to new UK accounting standard FRS102 would otherwise cause an artificial movement in their rating. The rules extend the opportunity to certify impacts from FRS102 where accounts from different years are compared but have been calculated on different bases.
In the consultation paper the PPF also proposed to undertake additional work to develop the approach to charging a levy to an eligible scheme which ceases to have a substantive sponsoring employer after a restructuring.
David Taylor said: “We will put in place a special rule recognising the risk profile of schemes which cease to have a substantive sponsoring employer, should that be necessary. For that reason alone, the rules published today are not absolutely final, but our intention is only to change them in relation to this one area, if at all. Accordingly we encourage schemes to act on the levy rules now, for example putting in place and certifying risk reduction measures. This can both improve security for members and help to reduce bills by minimising the risk to the PPF – something we are keen to encourage.”
The final 2017/18 levy determination will be published by 31 March 2017 at the latest.
More substantial changes will be considered for the next triennium, starting in 2018/19, on which the PPF plans to consult in spring 2017.
A full list of the relevant deadlines for the 2017/18 levy year has been published alongside the levy Determination.
Notes to editors
• The levy scaling factor and the scheme-based levy multiplier will be 0.65 and 0.000021 respectively.
The Pension Protection Fund protects millions of people throughout the United Kingdom who belong to defined benefit pension schemes. If their employers go bust, and their pension schemes cannot afford to pay what they promised, the PPF will pay compensation for their lost pensions. Tens of thousands of people now receive compensation from the PPF and hundreds of thousands more will do so in the future. The PPF is a public corporation, set up by the Pensions Act 2004, and is run by an independent Board.
- Monthly Experian Scores - Between 30 April 2016 - 31 March 2017
- Deadline for submission of data to Experian to impact Monthly Experian Scores - One calendar month prior to the Score Measurement Date (though accounts for new guarantors can be provided up to midnight on 31 March 2017)
- Submit scheme returns on Exchange - By midnight, 31 March 2017
- Reference period over which funding is smoothed - 5-year period to 31 March 2017
- Contingent Asset Certificates to be submitted on Exchange and with hard copy documents as necessary to PPF - By midnight, 31 March 2017
- ABC Certificate to be sent to PPF - By midnight, 31 March 2017
- Mortgage Exclusion (‘Officers’) Certificates and supporting evidence to be sent to Experian - By midnight on 31 March 2017
- Accounting change certificates [with supporting evidence] - By midnight on 31 March 2017
- Deficit-Reduction Contributions Certificates to be submitted on Exchange - By 5pm, 28 April 2017
- Certification of full block transfers to be completed on Exchange or sent to PPF (in limited circumstances) - By 5pm, 30 June 2017
- Invoicing starts - Autumn 2017
For further press information contact:
The PPF Press Office
0207 566 9775