Govt revokes general levy increase

In an update published on Friday, the Department for Work and Pensions stated that given the unprecedented circumstances following the coronavirus outbreak, the new increases have been suspended.

“The government will now focus on reviewing the structure of the levy and will be engaging with industry over the course of the next few months,” it added.

In a consultation published in October, the DWP stated that the general levy will need to rise to plug an estimated gap of £540m by 2029-30 under current rates. At the time, several pensions experts criticised the government’s proposals, arguing that the department proposed “knee-jerk solutions” that are not fit for purpose.

This levy, which was last increased in 2008-09, recovers the funding provided by the DWP for the core activities of the Pensions Regulator, the Pensions Ombudsman, and part of the activities of the Money and Pensions Service.

In the consultation response published in March, the DWP announced a rise of 10 per cent in 2019-20 rates on April 1 2020, with further increases informed by a wider review of the fee.

Guy Opperman, minister for Pensions and Financial Inclusion, said: "I understand the uncertainty businesses and employers are facing right now and that's why we've withdrawn the pension schemes levy increase. 

"We want to support businesses of all sizes, and this will help to reduce the unprecedented burden they're currently facing."

Nigel Peaple, director of policy and research at the Pensions and Lifetime Savings Association, said the industry body is very pleased with the government’s decision in “light of the hugely challenging economic situation”.

“As we said in our response to the government on this issue last autumn, it is much better to do a review of the levy structure before introducing any increases,” he said.

“We believe any such review will be better informed if it is delayed until after the current crisis has passed.”