All eligible defined benefit schemes, as defined in section 126 of the Pensions Act 2004 and the Pension Protection Fund (Entry Rules) Regulations 2005, have to pay the pension protection levy.

There are, however, some exceptions:

• Schemes in assessment do not have to pay a risk-based or scheme-based levy
• Schemes over 140 per cent funded on a section 179 basis at the underfunding risk measurement date do not have to pay a risk-based levy in 2008/09 or 2009/10
• Some schemes may qualify to have their invoices waived
• Some schemes may receive an invoice when they have ceased to become eligible for the PPF.

Schemes / parts in assessment
From 2008/09, the levy for schemes and parts of schemes in a PPF assessment period is zero, provided the PPF received a scheme failure notice before the beginning of the levy year.

For some multi-employer schemes there may be part of a scheme in assessment and a continuing part outside assessment. Previously, the continuing part paid a levy based on the scheme as a whole, i.e. including the risk of the part in assessment. With the part in assessment now charged zero levy and, therefore, excluded from the calculation, the continuing part pays a levy based only on the risk that they pose to the PPF.

Schemes in this position have the option of conducting a separate section 179 valuation of the assets and liabilities of the continuing parts only. Where a single s179 valuation exists for the scheme as a whole, the assets and liabilities used for the levy calculation are apportioned according to the number of members in the continuing part.

31 March 2010 is the deadline for the submission of s179 valuations for use in the 2011/12 levy.

If you think your scheme is ineligible for PPF compensation:
Some defined benefit pension schemes are not eligible for PPF compensation and so are not liable to pay the PPF levies. The Eligibility page of our website contains a summary list of the criteria which might make a scheme ineligible.

If you have received an invoice but think that your scheme may be ineligible, you should consult section 126 of the Pensions Act 2004 and the Pension Protection Fund (Entry Rules) Regulations 2005 (SI 2005/590), as amended, which are available on the UK Statute Law Database at: www.statutelaw.gov.uk.

If you still think you are ineligible, you should contact the PPF Stakeholder Support Team.

If you think your scheme should have its levy waived:
There are a very limited number of circumstances where the PPF may waive either your scheme-based or risk-based levy, or both. If applicable, the levy is waived for one year and a separate application must be made in subsequent years.

The criteria for levy waivers are set out in the Pension Protection Fund (Waiver of Pension Protection Levy and Consequential Amendments) Regulations 2007 (SI 2007/771) which are available at: www.statutelaw.gov.uk.

You can find a list of these circumstances, and the evidence you need to support your application, in the FAQs on levy waivers. If you think one of these categories applies to your scheme, you must contact the Stakeholder Support Team:

• before you have paid your invoice, and
• within 28 days of receiving your invoice.

Please note that waivers must be applied for annually.