PPF Levies 2023-24 and beyond – confirmed

The Pension Protection Fund has today published its final levy rules for the 2023-24 levy (to be invoiced in autumn 2023). Citing the continued improvement in its financial resilience, the PPF expects to collect £200m, almost half of that estimated for 2022-23 (£390m), with around 98% of schemes predicted to see a levy reduction. Exceptions are those where underfunding has increased significantly.

• The risk-based levy factor reduced by 23% from 0.48 to 0.37
• The scheme-based levy multiplier reduced by 10% from 0.0021% to 0.0019%
• Levy rates for levy bands 2-10 reduced, halving the band-to-band increase in levy rate
• Risk-based levy cap remains at 0.25% of scheme liabilities (and the short-term limit on increases in the risk-based levy removed as previously indicated), though the PPF does not expect any schemes to have a capped risk-based levy
• Updated asset stresses to reflect the increased number of asset classes to be collected in the 2023 Scheme Returns, with the main change being a reduction to the stress on UK equities
• A change Scorecard 6 (small group companies): the replacement value for Debtors where this variable is not available amended to 5.64
• There is also a change to Asset Backed Contribution rules to enable the PPF to take account of payments made to a scheme in exchange for the scheme trustee’s interest in an ABC Arrangement ceasing (eg by sale or other arrangement).

Longer-term proposals

The PPF will reflect on the feedback received on its proposals for the future of the levy.

The PPF has sought to reassure larger and stronger schemes some of whom were concerned that the changes might lead to higher levies as they may pay a proportionately greater share. The PPF confirmed that it considers higher levies in future to be ‘genuinely unlikely’.

The PPF has also confirmed that it will share all feedback on the use of any excess reserves with the DWP, acknowledging that the decision for this rests with Parliament.

Contacts

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Joanne Shepard

Director

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Mark Dowsey

Director

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