Strategies for Reducing the Pension Protection Fund Levy for UK Employers and Trustees

Produced in partnership with Squire Patton Boggs and Elizabeth Graham of Walker Morris LLP

Practice notes

Strategies for Reducing the Pension Protection Fund Levy for UK Employers and Trustees

Produced in partnership with Squire Patton Boggs and Elizabeth Graham of Walker Morris LLP

Practice notes

FORTHCOMING DEVELOPMENT: In its consultation paper published on 12 September 2024, the ppf proposes:

• a levy estimate for 2025/26 of £100m (the same as for 2024/25, which is the lowest levy ever and is consistent with the approach consulted on last year)

• changes to its methodology to allow the PPF to continue spreading the cost of the levy across a broad pool of risk-based levy payers (rather than allowing the levy to become concentrated on a smaller group). In particular, the PPF proposes to (i) reduce the levy scaling factor so that the PPF doesn’t collect more than the £100m planned, (ii) increase the scheme-based levy multiplier to ensure maximum utilisation of the scheme-based levy, and (iii) increase the asset and liability stresses used to two standard deviations

• to make it simpler for schemes to get levy credit for deficit reduction contributions (DRCs)

The PPF expects that these changes will have a limited impact and that schemes will pay broadly the same scheme-based

Jurisdiction(s):

United Kingdom

Key definition:

Pension Protection Fund definition

What does Pension Protection Fund mean?

The Pension Protection Fund (ppf) is a discontinuance fund which takes assets from the underfunded schemes of insolvent employers and provides a reduced level of benefits.

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