The Pension Protection Fund’s David Taylor reveals what schemes can expect from the PPF’s levy determination at the end of March.
We continually look to improve the levy model to make sure that it reflects as accurately as possible the risk each scheme poses to the fund. Each year we consult on changes we propose to the levy rules. The valuable input we receive informs our conclusions and the final levy rules for the following year.
We encourage schemes to act on the 2017-18 levy rules now, for example putting in place and certifying risk reduction measures
Feedback from stakeholders, particularly through our autumn 2016 consultation, supports our view that overall the current levy model is working well.
There are of course steps that could be taken to improve it further, but we believe the appropriate point to make any substantive updates is the next levy triennium (2018-21), on which we will consult in the coming months.
Limited changes for 2017-18
We aim to keep the rules stable over three-year periods, so we have made only limited changes for 2017-18.
The changes for 2017-18 include a mechanism for stakeholders to notify Experian where the move to new UK accounting standard FRS102 would otherwise cause an artificial movement in their rating. The rules extend the opportunity to certify impacts from FRS102 where accounts from different years are compared but have been calculated on different bases.
In our initial consultation document we had suggested allowing this for only two of the scorecards, but following feedback we have extended the option to all seven scorecards with trend variables.
We may need to introduce a special rule for schemes which – exceptionally – cease to have a substantive sponsoring employer. For that reason alone, the recently published rules are not absolutely final, but we intend to change them only in relation to this one area, if at all.
New risk model is a success, now stability is key
As promised when we consulted back in September, the levy rules for 2016-17 show very limited change as we endeavour to keep regulation as stable as possible over the next two years.
The final 2017-18 levy determination will be published by March 31 2017.
We encourage schemes to act on the 2017-18 levy rules now, for example putting in place and certifying risk reduction measures. This can improve security for members and help to reduce bills by limiting the risk to the PPF – something we are keen to encourage.
Once again, we want to thank stakeholders for their feedback and ongoing support.
David Taylor is general counsel at the Pension Protection Fund
