The Pension Protection Fund (PPF) will pause its Alternative Covenant Scheme (ACS) levy for one year while it reviews the methodology used to calculate the charge.
The lifeboat fund will also keep its traditional levy at zero for a third consecutive year, following a consultation.
The PPF said the ACS levy pause would allow it to complete its review and ensure the methodology remains proportionate to risk, reflecting key developments, including the final shape of the regulatory regime being introduced by the government.
The pause does not permanently remove the ACS levy, and future charging decisions will take account of market developments and the outcome of the wider review, the PPF added.
Revised section 143 and 179 valuation assumptions
The PPF has also published its response to a consultation on updated actuarial assumptions for valuations under sections 143 and 179 of the Pensions Act 2004.
The consultation followed a review of bulk annuity market pricing, which found that pricing had become more competitive since the PPF’s last detailed review.
The proposed changes to discount rates and mortality assumptions will align the valuation bases more closely with current buy-out pricing. They are expected to reduce estimated liabilities, although the impact will vary by scheme.
Following feedback, the PPF will implement the proposed assumptions, with a revised effective date for section 179 valuations. The new section 143 assumptions will take effect from 31 May 2026, while the revised section 179 assumptions will apply to valuations with an effective date on or after 30 November 2026.
The PPF said the revised timetable would provide certainty for valuations already in progress.
The fund will publish updated valuation guidance later this year, following the publication of secondary legislation under the Pension Schemes Act 2026.
The guidance will specify when section 143, section 179 and similar valuations must account for pre-1997 indexation of PPF compensation, and how this should be reflected.
For superfunds assessed by The Pensions Regulator (TPR), the updated section 179 guidance will also specify that the financial and mortality assumptions used for valuations will be those in force for section 143 valuations at the time.
The PPF said this approach would provide a more accurate assessment of liabilities and would be relevant to both ACS levy calculations and the default superfund wind-up trigger.
Aaron Pang, acting chief actuary at the PPF, said: “Pausing the ACS levy will allow us to refine the long-term framework for Alternative Covenant Schemes, ensuring it remains risk-proportionate, practical and responsive to market developments while continuing to protect our current and future members.”
Pang added that applying the revised assumptions to valuations with an effective date on or after 30 November 2026 would provide greater certainty and avoid unnecessary disruption for valuations already in progress.
“For ACS, the combination of a one-year levy pause and a more appropriate valuation approach provides a stable basis while we develop the longer-term framework in consultation with stakeholders. Aligning the relevant section 179 assumptions with the section 143 basis will also support a more accurate assessment of superfund liabilities,” he explained.
The announcement comes as the UK superfund market develops. Yesterday, TPT announced that its run-on superfund had received regulatory clearance, providing an alternative to Clara-Pensions.
TPR said another superfund was also going through the approval process, with a further entrant expected shortly.
Rauri Grant, head of policy and external affairs at TPT, posted on LinkedIn: “Superfunds by definition improve member security, thanks to gateway tests, so equating their levy treatment with regular schemes is a progressive and fair step – so thanks must go to PPF for taking a considered view.”
