UK - The Pension Protection Fund (PPF) has confirmed it is "sticking" to plans for a risk-based levy cap of 0.5% for the 2010/11 risk-based levy, despite objections from a number of respondents.
In its final policy statement for the 2010/11 levy, published alongside the final determination and the new levy practice guide, the PPF reiterated its plans to collect an overall levy of £720m (€811m), while the levy scaling factor will be 1.64 and the risk based levy cap will be halved in order to protect the most vulnerable 10% of schemes.
The PPF announced the reduction in the cap to 0.5% of protected liabilities in a consultation paper in October. However, the move was criticised by some consultants who claimed it could be seen as a punishment to the remaining 90% of schemes who would have to pay more. (See earlier IPE article: PPF cap reduction 'punishing' 90% of UK schemes)
In his foreword to the document, Alan Rubenstein, chief executive of the PPF, admitted: "A minority of respondents opposed the reduction in cap because it increases the share of levy for uncapped schemes. The reduction in cap is a short-term measure, but one that we've made with the long-term in mind: helping hard-pressed schemes through the recession means fewer claims for surviving schemes to fund in future. After consultation, therefore, we've decided to stick to these proposals."
The final levy statement also outlinds changes to the way probabilities of insolvency for foreign employers are calculated, while the PPF said it had also revised the requirement for certification of block transfers following feedback from the industry. The document also confirmed a 9 April 2010 deadline for certification of deficit reduction contributions.
Rubenstein stated: "Understandably, affordability of the levy is the biggest concern at the moment and this creates difficult decisions for all of us. At the PPF we need to avoid imposing a burdensome levy on schemes and employers — both weaker and stronger — at a time when cash flow is restricted, while making sure we provide the level of protection that scheme members deserve."
The full 2010/11 Pension Protection Levy Policy Statement, and levy determination can be found on the PPF website.
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