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.
2018/19 Levy Rules and Policy Statement
On 19 December 2017 we published a Policy Statement and Levy Rules for the 2018/19 levy year. We have also published FAQs for levy year 2018/19 here.
We confirmed the Levy Scaling Factor (LSF) for 2018/19 will be 0.48 and the Levy Estimate is £550m. The Scheme Based Levy (SBL) remains at 0.000021 x unstressed liabilities and the Risk Based Levy Cap is reduced to 0.5% (0.005000) x unstressed liabilities.
We also confirmed changes or developments in the following areas, after two consultations
• Use of credit ratings and the Standard and Poor’s credit model for regulated financial entities in addition to the Experian model
• Use of five new scorecards in the Experian model
• Maintaining the use of monthly insolvency risk scores, though only six months’ scores will be used in 2018/19
• Requiring, for Type A contingent assets with a levy benefit of £100,000 or more, that a guarantor strength report supporting the level of the realisable recovery has been obtained.
• Simplification of the certification of deficit reduction contributions
• Simplification of the reporting requirements for certain types of block transfers
• An alternative approach to the evidence of title requirements for ABC arrangements with property assets.
• Revised asset and liability stress factors
The Experian Portal has been updated and the impact of the revised scoring methods are reflected in scores.
Contingent Asset standard forms
Our Policy Statement also announced our conclusions on the additional consultation we held on contingent asset standard forms used for putting contingent assets in place.
We have now published revised contingent asset forms and updated guidance, which includes our conclusions on a range of issues around the operation of the agreements and the need for re-execution, which can be found here.
On 1 March we clarified limited aspects of the rules and guidance, details of which can be found here. The guidance below reflects the 2018/19 rules except for the Invoicing section which we will update in early 2018.
We have added some short videos on ensuring your scheme/employer data is accurate and certifying contingent assets and DRCs. These can be viewed here.
Levy Data Correction Principles
Guidance on ABCs
Guidance on Bespoke Investments Risk Calculation
Guidance on Block Transfers
Guidance on Contingent Assets (General Part 1 of 4)
Guidance on Contingent Assets (Type A - Part 2 of 4)
Guidance on Contingent Assets (Type B - Part 3 of 4)
Guidance on Contingent Assets (Type C - Part 4 of 4)
Guidance on Deficit-Reduction Contributions
Guidance on Exclusion of Mortgages
Trustees and employers can check their Experian data and scores by logging on the Pension Protection Score Portal