The Society of Pension Professionals has helped draft an amendment to the Pension Schemes Bill aimed at abolishing the Pension Protection Fund’s (PPF) administration levy.
In July, Pensions Expert reported that private sector defined benefit (DB) pension schemes had been charged the levy worth a total of £15m with no prior warning from the Department for Work and Pensions (DWP) or the PPF.
The administration levy – which is separate from the main PPF levy – had been suspended for two years due to the PPF’s strong funding position. It is collected by the Pensions Regulator on behalf of the DWP. The department then uses it to fund a grant to the PPF to cover administration expenses for the lifeboat fund and Fraud Compensation Fund. Money is held separately from other PPF funds.
In a press release, the Society of Pension Professionals (SPP) said it had worked with Liberal Democrat MPs Steve Darling and John Milne to draft an amendment to the bill that would abolish the administration levy entirely.
“The Liberal Democrats are keen to remove unnecessary bureaucracy and costs, so we are happy to table an amendment that seeks to abolish the administration levy.”
John Milne, Lib Dem MP
Shayala McRae, chair of the SPP’s legislation committee, explained: “Legislative change is needed. The Pension Schemes Bill provides a good opportunity for this change to take place, and the SPP is pleased to have received cross-party backing for the solution that we have put forward.
“If the amendment is not accepted during its current stage in the House of Commons, we are hopeful it will be tabled again as it passes through the House of Lords. We are always keen to ensure the best possible outcome for schemes and savers, and the abolition of an unnecessary levy certainly meets that criteria.”
John Milne, who is a member of the Work and Pensions Select Committee and the Pension Schemes Bill committee, added: “The Liberal Democrats are keen to remove unnecessary bureaucracy and costs, so we are happy to table an amendment that seeks to abolish the administration levy. Abolition will reduce the administrative burden on pension schemes and cut costs. That means better pension outcomes for everyone.”
The amendment adds a new clause to the bill, which would in turn amend the Pensions Act 2004 – the legislation that established the PPF. It would allow for administration expenses to be paid out of the PPF’s general funds, while the Fraud Compensation Fund – which is managed by the PPF – would be able to pay expenses from its existing separate levy.
The existing levy would be abolished with effect from 1 April 2026, if the amendment is accepted.
The Pension Schemes Bill as currently drafted contains a clause that would allow the PPF to charge no scheme-based or risk-based levies, without compromising its ability to raise funds at a later date.
