The government has published amendments to the Pension Schemes Bill that will scrap the administration levy it collects for the Pension Protection Fund (PPF).
The additions are among several tabled by senior Labour Party members following last week’s Budget announcement. Other changes include amendments to allow for the indexation of pre-1997 compensation for members of the PPF and Financial Assistance Scheme (FAS).
Amendments NC30 and NC35 were tabled by Pat McFadden, the Secretary of State for Work and Pensions. It makes changes to the Pension Schemes Act 1993 and the Pensions Act 2004 to allow the PPF’s operations to be funded from the general levy rather than the separate administration levy.
It also clarifies that no charge is to be levied on defined benefit pension schemes for the 2023-24 and 2024-25 financial years.
The administration levy was suspended for two years following a recommendation by former Pensions Regulator boss Lesley Titcomb. However, it was unexpectedly reinstated earlier this year – immediately after it was announced that the general levy was likely to be reduced to zero.
In September, during parliamentary committee debates about the Pension Schemes Bill, pensions minister Torsten Bell pledged to abolish the administration levy after lobbying from the Society of Pension Professionals.
Kendall backs indexation changes
Separately, Liz Kendall – McFadden’s predecessor as work and pensions secretary – has put forward three amendments relating to the indexation of PPF compensation.
In her Budget speech last week, chancellor Rachel Reeves announced that members of the PPF and FAS with benefits accrued before 1997 would begin receiving inflation-linked annual increases. Members have been campaigning for years as their pensions have failed to keep pace with inflation.
The PPF published details of how the changes could be implemented on Friday, but emphasised that details would be finalised through the Pension Schemes Bill. This means that the earliest members are likely to receive any increase is in January 2027.
Last week, the PPF said indexation would only apply to members’ compensation if their previous scheme had linked pensions to inflation. The wording of the amendments indicates that members will be given the benefit of the doubt if it is not clear whether indexation was applied in the past.
How the PPF will pay inflation-linked compensation to FAS members
Increases will be capped at 2.5%, and will only apply to people whose original schemes provided for mandatory indexation on pre-97 pensions. The PPF said this would “broadly align pre-97 indexation rules with those already in place for post-97 pensions for PPF and FAS members”. Read the full article.
