On the go: The Department for Work and Pensions sought feedback from the pensions industry on Friday ahead of its proposed increase to the general levy paid by pension schemes.
The rise in rates paid by trustees of occupational and personal pension schemes is set to take place in April 2020.
The levy, which reimburses the DWP’s grant-in-aid to three regulatory bodies – The Pensions Regulator, The Pensions Ombudsman and Money and Pensions Service – has seen annual expenditure increase significantly relative to revenue.
The consultation published today states: “Without an increase in levy rates, some of the core activities of the pension bodies would need to be stopped or curtailed.
“Under-investment could not only threaten the stability of systems but also impact the modernisation of services that the government requires and which schemes and their members are entitled to expect.”
The DWP’s decision to raise funding comes after the levy’s cumulative balance moved from surplus to deficit in 2018, resulting in a deficit of over £16m this year and estimated to grow to over £50m by 2020.
The rise in levy expenditure, which is also linked to increased activities carried out by TPR, TPO and MaPS, aimed to support government objectives, pensions schemes and savers.
The government sets out four options to address the current deficit to realign the levy revenue with ongoing expenditure in the longer term, these range from phasing in the increase over three to 10 years.
The consultation period begins today and runs until November 15 2019. Responses should be sent to: generallevy.consultation@dwp.gov.uk.
