The Pension Protection Fund (PPF), the UK’s lifeboat scheme, has today announced in its 2022/23 levy consultation it expects to collect £415m (€481m) from its levy payers, a reduction of £105m from the previous levy year.
The consultation document also showed that 82% of schemes that pay a risk-based levy will see a reduction, and that the PPF levy methodology will remain unchanged.
“The PPF’s strong financial position throughout the pandemic, and defensive investment strategy, have been instrumental in its decision to allow the levy estimate to fall,” it stated.
David Taylor, executive director and general counsel at the PPF, said: “Despite the ongoing risk of employer insolvency, our levy payers’ improved funding positions, together with our financial strength, mean we can avoid raising our levy pre-emptively and maintain stability in our proposed levy rules.”
The levy has been reduced due to improvements in scheme funding, an update in the way scheme underfunding will be calculated, and employers’ financial resilience despite recent economic challenges, the fund noted.
Taylor said that while it was good to see an overall improvement in scheme funding, “we’re mindful of uncertainties around future insolvency rates and the ongoing risk of claims, some of which could individually have a material impact on our reserves”.
He stressed it was vital that the PPF continues to collect sufficient levy “we can ensure we can continue to pay our current and future members the compensation they’re entitled to”.
The PPF also confirmed the measures introduced to help schemes and employers with the cost of the levy in 2021/22, including the Small Scheme Adjustment, lower cap on the risk-based levy and COVID-19 easement, will remain in place.
The levy consultation is open from 28 September to 9 November. To read and respond visit PPF’s website.
Atkinson Northern scheme in buy-in deal with Legal & General
Atkinson Northern Limited Retirement Benefits Scheme, the pension fund for the distributor of construction materials, has completed an £8m (€9.3m) buy-in with Legal & General Assurance Society Limited.
The deal covers the benefits of 45 pension scheme members, Legal & General announced, adding that it will also take on the responsibility for payroll of the scheme’s members by October 2021.
The transaction involved Legal & General locking in its price entirely to scheme assets in exclusivity, it said.
“This provides certainty for the trustees on the premium at the end of the exclusivity period and mitigates the risk of pricing diverging from the value of assets,” it added.
The trustees were advised on the transaction by XPS Pensions Group and legal advice was provided by Neon Legal.
Andrew Firbank, of PAN Trustees UK and chair of trustees for the scheme, said: “Getting better security for members and removing risk from the company has been a vital aim of the trustees and company for many years.”
He added that over the past 18 months “significant work” had been undertaken to get the scheme investments and data into “the best possible shape”, claiming this had made the transaction affordable and efficient.
Julian Hobday, origination and execution director at Legal & General Retirement Institutional, said: “This transaction demonstrates our ability to provide peace of mind to pension schemes of all sizes and we look forward to working closely with the trustees going forward.”