UK - The Pension Protection Fund (PPF) has honoured previous commitments by confirming the levy for 2010/11 will be £700m (€817.2m), indexed to wages, although it warned schemes the levy may rise in the future to allow the PPF to meet its commitments.
The PPF announced in 2007 that it would keep the pension levy stable at £675m, indexed to wages, for three years, and following a £700m estimate for 2009/10, the organisation has confirmed the commitment will be honoured with a figure of £700m uprated in line with wages.
Levy estimates are not normally released until later in the year, when the Office of National Statistics (ONS) publishes wage indexation figures and the PPF outlines its levy scaling factors. However the organisation said it wanted to "ease the continuing economic uncertainty" for pension schemes and employers.
Alan Rubenstein, chief executive of the PPF, said: "Despite the economic climate deteriorating considerably since last year, we believe it's important to stick to our commitment made in 2007 to keep the total amount of levy we aim to collect stable for three years."
He confirmed pension schemes will not be able to calculate their individual levy bills until the autumn, when the PPF confirms the final levy estimate, but added, "we felt it was important we recognise now the financial difficulties many employers and pension schemes are experiencing and to reassure them we won't be raising in real terms the total levy we want to collect during 2010/11".
The Pensions Act 2004 restricts the amount the levy can be increased by in any one year to 25% of the previous year's estimate, resulting in a levy ceiling of £863,412,967 for 2009/10, although the government increases this each year in line with wages inflation.
That said, Rubenstein stressed that while the PPF wants to "relieve some of the burden faced by employers and schemes during the recession, we will consider in the future raising the amount of levy we collect above the rate of inflation, if necessary, to meet our commitments".
He sought to reassure members of schemes within the PPF that the organisation currently has "more than enough money to make compensation payments", as it currently has assets of almost £3bn while the average compensation to members is £4,000 a year.
Following confirmation from the PPF, Nigel Peaple, director of policy at the National Association of Pension Funds (NAPF), described the move to keep next year's levy at broadly the same level as a "sensible measure at a time when pension funds are under pressure and need stability".
But he added: "As we argued earlier this year, we believe the government should make the ceiling a permanent measure and acknowledge that over the very long term only the government can act as the ultimate guarantor of the levy."
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