The final PPF levy determination. How final is it?

by John Wilson   •  

The PPF published its final levy rules and guidance for the 2020-21 levy year on 16 December 2019.

You can find them here:

The key elements to note are:

  • The PPF confirmed the total levy it expects to collect at £620 million.
  • The 2020/21 rules are little changed from 2019/20, and are broadly in line with the proposals set out in September’s consultation.
  • The PPF also published revised guidance on contingent assets, which remains largely as consulted on but reflects comments received.
  • The PPF has set out the basis on which a small number of significantly affected levy payers, most likely to be SMEs, can ask for an adjustment of their insolvency risk score, where a GMP equalisation adjustment is the sole reason they are reporting a loss rather than a profit in their accounts.

While we feel it is important to draw the rules and guidance to your attention, our full Client Alert will not be published until later this week because there is a prospective development that may mean the final levy rules are not so ‘final’.

The Bauer case

Mr Bauer had been granted several occupational old-age pension benefits by his former employer, including a pension paid through a supplementary occupational pension institution (PKDW) and a monthly pension supplement paid by his former employer.

In 2003, PKDW, experienced financial difficulties and was authorised by the relevant German national authorities to reduce the amount of the pensions paid.

Under German law, Mr Bauer’s former employer was then obliged to ‘offset’ this reduction in his benefits. However, in 2012, the employer entered insolvency proceedings.

PSV (an insolvency insurance institution for occupational pensions) informed Mr Bauer that it would assume responsibility for the payment of the monthly pension supplement and a Christmas bonus that was also due. However, PSV would not assume responsibility for the offset mentioned above.

Mr Bauer disputed this refusal and several questions were then referred to the CJEU by the German national court. In essence, the German Court asked whether the German Government via the PSV had to compensate Mr Bauer for the top-up payment that his ex-employer paid to cover the pension benefit reduction.

The answer directly impacts the level of protection that must be provided to individuals in respect of their pension rights on the insolvency of their employer / former employer under Article 8 of the Insolvency Directive (2008/94/EC).

And the Court of Justice of the European Union is expected to deliver its judgment on 19 December.

Watch this space …

Further reading

Spence Quarterly Update Q4 2020

by Andrew Kerrin   •  

The threat of inflation

by Brendan McLean   •  

Government spending in response to Covid-19

by James Sweetnam   •  

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