PPF admin levy to decrease on budget restructure

The department for work and pensions (DWP) published its response to a consultation on the PPF board making payments from the fund's investment returns, which would previously have been made from its levy-funded administration budget.

The restructuring is a consequence of the PPF gaining more returns on assets through transferring schemes and recoveries from insolvent employers, a PPF spokesman told schemeXpert.com.

The changes give the organisation more control over its administration budget, which consequently will be lower as from April 2011 – a fact to be “taken into account” when levy rates are calculated for future years, he added.

“The benefit in the reduction for 2011/12 will be felt in later years,”schemeXpert.com was told. “We have £5.5bn worth of assets and we are set to be one of largest pension funds in the UK over the next few years.

“So, it’s right that the PPF bears the costs related to its investment management function as well as managing and monitoring financial risks and its managers.”

Costs including the appointment of fund managers, legal advice, insolvency practitioners and recovery experts will then be sourced from the fund, rather than the administration budget.

The government added a provision to the draft regulations, meaning those activities relating to the PPF’s investment and insolvency functions, which are not listed in its regulations, should be charged to the PPF.

The government response read: “The [PPF] Board necessarily conducts a wide range of activities in relation to the investment and recoveries functions and we agree with the PPF that it is possible that the draft Regulations might not cover all the relevant provisions... where new circumstances arise.”

In response to one respondent’s concern over the transparency of these payments once they have been moved into the PPF, the board confirmed “it will consider and where appropriate revise its reporting processes to ensure transparency for stakeholders,” according to the DWP document.