Posts Tagged ‘Pension Protection Fund Levy’

Helen Toner

The Pension Protection Fund (“PPF”) published the final rules for the 2016/17 PPF Levy on 17 December 2015. As expected, the rules for 2016/17 are substantially the same as 2015/16 reflecting the PPF’s desire to maintain stability of methodology.

Following feedback, the PPF have made some slight technical changes relating to the 2016/17 levy: Read more »

Alan Collins

Spence & Partners latest blog for Pension Funds Online –

With many schemes currently receiving confirmation of a hike to their Pension Protection Fund (PPF) levy (the invoices for 2015/16, the first year where Experian risk ratings apply, have begun to arrive), the PPF has just issued their consultation document for the computation of the 2016/17 levy.

Given the substantial shift brought in for 2015/16, it is some comfort that the PPF have “chosen to keep the levy rules substantially the same for 2016/17”. In particular, the main levy calculation parameters (such as the scaling factor, the scheme-based levy multiplier and levy bands) will remain unchanged. Read more »

Laura Cumming

The Spence team has sifted through all the industry changes and trends from the last quarter, picked out the highlights and condensed it into a snappy report for you to download. Each update briefly summarises what you need to know, and clearly sets out the actions you need to take, saving you hours scouring through multiple reports, press releases, blogs and articles.

Some key updates to keep an eye out for are:

  • HMRC’s vital VAT judgment; this could see schemes recover VAT on investment management costs
  • PPF levy costs; the PPF’s recent announcement on the 2015/16 levy is fundamental to your scheme’s PPF levy cost
  • Contracting Out; make sure you are keeping in line with the HMRC’s most recent update to ensure you are ready for the abolition of contracting out.

Download your copy of the Pensions Quarterly Update report here.

If you have any questions, please don’t hesitate to get in touch with your usual contact or the Spence team.

 

Alan Collins

Welcome news from the PPF

Spence & Partners latest blog for Pensions Funds Online –

Last month I talked about how the Pension Protection Fund (PPF) has improved processing times and introduced expert panels from across the pensions industry to implement continuous and appropriate improvement for schemes throughout the assessment process.

Well, the PPF have been in the news again this week following the results of this year’s consultation. So what were the highlights and how will it affect the industry?

Scheme trustees and sponsoring employers will have received some comfort from the PPF’s announcement regarding the 2015/16 levy. For example, the PPF intends to collect £635m in 2015/16, around 10% less than the estimated intake for 2014/15 (invoices for which will have been issued for most schemes in the last few weeks) which will be a relief to many.

This lowered estimate filters through to the levy calculation, where the Scheme Based levy for each scheme will be more than 60% lower (all else being equal) and the Risk Based Levy (usually the significantly higher of the two) will be around 11% lower (again all else being equal).

Another welcome result comes through an easing in the PPF’s interpretation of Asset-Backed Contributions (ABCs). The latest update confirms that all forms of ABCs will count towards reducing the levy, “provided the ABC is valued in a way that reflects the value to the PPF in the event of insolvency”. Although an annual valuation of the asset is required, potentially increasing the cost of holding it, ABCs will still be a very effective PPF levy management tool for those schemes and employers which enter in to such agreements.

Further comfort should also be sought by the PPF’s confirmation that they will consult on the issues raised around mortgage ages, and how recently the secured debts were taken on by the employer. Previously this resulted in some very negative outcomes for employers who had re-mortgaged loans, but the PPF has committed to finding a solution that means this (and associated charges unlikely to affect solvency) will not unfairly increase the levy.

With these improvements there still comes a warning for schemes to keep their houses in order. Mitigating your levy is still a vital action to be taken, especially as the 31 October deadline approaches for setting next year’s levy. For small and medium-sized employers there is a risk that the recent move from D&B’s scoring system to Experian will adversely affect their score around insolvency risk measurement – so I would suggest all trustees and employers check their current score now and do whatever they can to reduce this before the deadline.

No matter your thoughts on the levy, it is here to stay. The good news is that the PPF are taking steps to accommodate the changing ways that pension schemes are run, and how and where they invest their assets. There is however still a great responsibility on trustees and employers to maintain their focus. Monitoring your levy and taking all necessary steps to reduce it where possible, many of which are simply around meeting deadlines and providing appropriate documentation, is still the best way to reduce the cost to your scheme.

Pension Funds Online

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