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Pension Protection Levy 



The pension protection levy is one of the ways that the PPF funds the compensation payable to members of schemes that transfer to the Pension Protection Fund.


Third Levy Triennium Policy Statement and 2018/19 Levy Consultation Document

On 27 September 2017 we published a combined Policy Statement on the Third Triennium Consultation and Consultation Document for Levy Year 2018/19.

We have also published draft levy rules and guidance for Levy Year 2018/19 which can be accessed on the 2018/19 Consultation Page.

The Policy Statement includes confirmation that we will 

  • Use credit ratings and the Standard and Poor’s credit model for regulated financial entities in addition to the Experian model
  • Use five new scorecards in the Experian model
  • Simplify the certification of deficit reduction contributions
  • Maintain the use of monthly scores, though only six months’ scores will be used in 2018/19

 

The Experian Portal is being refreshed in early October and the impact of the revised scoring methods will be reflected in scores once it re-opens.

The Consultation Document announces our levy estimate of £550m for 2018/19 (compared to £615m in 17/18) and seeks comments on proposals regarding

  • Revised levy rates for Bands 1 to 3
  •  Revised asset and liability stresses
  • Simplification of the reporting requirements for certain types of transfers.

 

We held a webinar on 16 October 2017, which covered the outcome of our first consultation as well as the new issues covered in the 2018/19 consultation. We plan to make a video of the webinar available shortly.

The consultation closes at 5pm on 1 November 2017



Consultation on Contingent Asset standard forms

On 19 October 2017 we published an additional consultation on the standard forms used for putting in place contingent assets.

Given the technical nature of the issues we are consulting on, we expect that we will publish revised contingent asset forms in early January 2018 in order to ensure stakeholder views are given due consideration. We would welcome comments on the draft agreements, that have been published in redlined forms showing the changes from the current standard forms, and on the questions asked in the consultation document.  

The scope of the consultation is:

(1)  The type of obligations that should be covered in contingent asset agreements; and

(2) The operation of the liability caps in the agreements, in particular the fixed cap

We have published an FAQ concerning the use of standard forms for new contingent assets to be certified in 2018/19.

The consultation documents can be found here and the draft agreements can be found here, and the consultation closes on 21 November 2017 at 5pm.

 

Third Levy Triennium 

On 23 March we published our consultation document for the third levy triennium (2018/19 to 2020/21).

The consultation outlines proposals for development of the insolvency risk model including two new scorecards and rebuilding of three existing scorecards. It also proposes to adopt the use of credit ratings for some of the largest employers and a specific methodology for regulated financial services entities.

Proposals are also made on the certification of deficit reduction contributions and parental guarantees (Type A contingent assets).

The consultation document also seeks views on a number of other areas including those suggested by the Work and Pensions Select Committee in its 2016 report, such as the possibility of a levy discount for good governance, and reducing the burden for smaller schemes.

Alongside the consultation document we are publishing a technical appendices document, draft insolvency risk rules and an independent review of the process of reviewing the PPF-specific model. All the documents can be found on the Third Triennium Consultation page 

On 28 April we made some limited amendments to the consultation documents to ensure they were clear and consistent. The detail of the changes can be found here. Additionally, entities covered by the proposals on the use of credit ratings and the industry specific scorecards have been unable to see the proposed new score in the Portal. We are publishing some FAQs here to assist stakeholders in this situation.    


The guidance below reflects the 2017/18 rules.

 Section

 Includes Information About

About the Levy 

Scheme-based levy, risk-based levy and other levies

   Specific Levy Year Information

Key information for current and past years

Who Has to Pay

Eligibility and Schemes in Assessment

How the Levy Works

Information used, transformation of s179 data and key elements of calculation

Insolvency Risk 

Calculation of insolvency risk, PPF-specific model and the Pension Protection Score Portal

   Multi-employer Schemes

Use of weighted levy rates for multi-employer schemes

   Incomplete Mean Scores

Use of averaged calculations where Mean Scores not available for all employers

   Scheme Structure

Scheme structure factors for Partial Segregation, Last Man Standing and Centralised Schemes

Levy FAQs

Levy FAQs

Underfunding

How underfunding is calculated

Data Deadlines

Data Deadlines for the 2017/18 Levy

Risk Reduction

Introduction

   Contingent Assets

Types of Contingent Assets and Guarantor Levy Band adjustment

   Deficit Reduction Contributions

Basis for DRC recognition in levy calculations

Block Transfers

Certification of Block Transfers

Invoicing

Invoicing (Updating this page later)

   Querying Your Invoice

What to do if you think your invoice is incorrect

Levy Waivers

Who can apply for a waiver and how to do it

Reviews and Appeals

What rights of appeal exist and what is the scope, deadline for appeal etc?

 

 

Additional Guidance

 

Levy Data Correction Principles
Guidance on ABCs
Guidance on Bespoke Investment Risk Calculation
Guidance on Block Transfers
Guidance on Contingent Assets
Guidance on Exclusion of Mortgages


Trustees and employers can check their Experian data and scores by logging on to the Pension Protection Score Portal