The UK government has confirmed plans to abolish the Pension Protection Fund (PPF) administration levy, pensions minister Torsten Bell said in response to parliamentary questions last week.
Bell was replying to John Milne, liberal democrat member of parliament (MP) and member of the Work and Pensions Select Committee, who called for an amendment to the Pensions Act 2004 to abolish the levy, which currently allows the PPF to meet its expenses from scheme charges.
The amendment was tabled by Milne and fellow liberal democrat MP Steve Darling.
Milne argued that PPF administration costs could instead be covered by the wider protection fund. The levy was suspended from 2023 to 2025, and many in the industry expected this to lead to its full abolition, in line with the Department for Work and Pensions’ 2022 review.
Instead, the levy returned this year, with the Society of Pension Professionals (SPP) estimating that defined benefit schemes will be required to pay more than £15m.
The amendment was originally drafted by SPP, which remains a strong supporter, and the proposal is broadly backed across the pensions sector.
Milne said discussions with the PPF indicated that the fund had no objection to the proposal and would be content for administration costs to be met from general reserves.
He said: “Given industry support and PPF agreement, we feel that the government should implement this change without any further delay.”
Bell noted: “I acknowledge the concerns surrounding the abolition of the Pension Protection Fund admin levy. This is not a new issue; it has obviously been raised significantly by parts of the industry.”
He added that he “broadly supports” an amendment that would shift administration costs to general reserves, but described the current drafting of section 116 of the Pensions Act 2004 as “unworkable”.
Bell assured Milne that the government intends to introduce amendments at a later stage to “achieve the same aim”.
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