USS attacks PPF levy focus on investment strategy
UK - The chief executive of the Universities Superannuation Scheme (USS) has labelled the Pension Protection Fund’s (PPF) proposal to consider the investment strategy of schemes when calculating the levy as “inappropriate”.
Speaking at the National Association of Pension Fund’s (NAPF) annual conference last week, Tom Merchant also criticised the fact the USS has to pay the PPF levy even though he believes the chances of the universities becoming insolvent is unlikely.
While discussing the levy changes that were under consultation earlier this year, Merchant said: “Investment strategy is inappropriate for inclusion. Trustees should be able to get on with their jobs”. (See earlier IPE article: PPF to set up steering group for revising levy plans)
He admitted there is an element of “self-interest” in his argument as the USS is a relatively immature scheme and has “much of its investments in return-seeking assets”, which he suggested the PPF would “probably consider risky”.
But he argued that with such a strong employer covenant, “why should be we have to pay an even higher levy for a strategy agreed by trustees and in line with the risk profile of the scheme?”
He added further fuel to the fire by suggesting fairer levies could be implemented if the PPF had its own protection fund in case it becomes insolvent, but he claimed “that could only be if the government agreed to underwrite the PPF in some way”.
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