The Pension Protection Fund (PPF) has confirmed it will not charge a conventional levy to defined benefit pension schemes for the 2027-28 financial year – marking the third consecutive year it has not charged schemes.
The lifeboat fund also announced today (22 October) that it would pause the Alternative Covenant Scheme levy for a year, meaning superfunds such as Clara-Pensions and TPT’s new offering will not pay a levy.
The Alternative Covenant Scheme (ACS) levy is designed to cater for pension schemes without a substantive sponsor, and is currently being reviewed in light of the emerging superfund market. The PPF emphasised that the pause did not mean this levy would be scrapped.
“Pausing the ACS levy will allow us to refine the long-term framework for alternative covenant schemes, ensuring it remains risk-proportionate, practical and responsive to market developments.”
Aaron Pang, PPF
Aaron Pang, acting chief actuary at the PPF, said: “Not imposing a levy for conventional defined benefit schemes reflects the PPF’s financial position and evidence-based approach to levy setting.
“Pausing the ACS levy will allow us to refine the long-term framework for alternative covenant schemes, ensuring it remains risk-proportionate, practical and responsive to market developments while continuing to protect our current and future members.”
Alongside the levy announcement, the PPF also published the results of a review of its section 143 and section 179 valuation methodologies. Updated guidance will be published later in the year as it is subject to secondary legislation linked to the Pension Schemes Act.
The main changes to both valuation methods involve updated discount rates and mortality assumptions to ensure they are aligned with insurance market pricing. It will also adjust how valuations apply to superfunds to ensure “a more accurate assessment of superfund liabilities”, according to Pang.
Pang explained that the changes to section 179 valuations – which are used to calculate levies and construct the PPF 7800 index, among other uses – would “provide more certainty and avoid unnecessary disruption for valuations already in progress”.
He continued: “For alternative covenant schemes, the combination of a one-year levy pause and a more appropriate valuation approach provides a stable basis while we develop the longer-term framework in consultation with stakeholders.”
Separately, the PPF announced this week that it had appointed Matt Gurden as its permanent chief actuary. Gurden will join early in 2027 from the Government Actuary’s Department.
