Pension Protection Fund announces new £675m levy estimate

The Board of the Pension Protection Fund has today published, for consultation, its levy estimate of £675 million for 2007/08. The proposed levy estimate will help to make up for an undercollection of levy fees during 2006-2007 and help reduce the Pension Protection Fund’s deficit - a move to ensure public confidence in the fund’s financial security.

PPF Chairman, Lawrence Churchill said: “Today’s announcement accords with the views of many advisors; that we should recoup some of the undercollection of last year’s levy. The Board has taken a measured approach which should reduce some of the Fund’s deficit in 2007/08.”

PPF Chief Executive, Partha Dasgupta, said: “Last year, we collected less money than we had originally anticipated because of market movements, improvements in the quality of data, direct action by schemes to reduce their risk and as a result of fixing the process for distributing the levy between schemes. Going forward we will need to collect a levy nearer our original estimate.

“Importantly, the funding arrangements announced today will further ensure public confidence in the financial security of the Pension Protection Fund, reassuring beneficiaries that their compensation each month is coming from a known, trusted and stable source.”

Partha Dasgupta said: “Now that more detailed information on schemes is available through the Purple Book published earlier this week, we have decided that a 1.25 per cent cap on how much an individual scheme pays in risk based levy strikes the right balance between continuing to protect weaker schemes and not penalising stronger schemes which subsidise them.”

He also stressed that continuing to provide incentives to pension schemes to reduce their own risks remains at the heart of the PPF proposals.