On 17 November 2025, the Pension Protection Fund (PPF) published its consultation "Levy consultation: Levy rules for 2026-27".
As widely expected, in 2026-27, the PPF expects to raise no levy from schemes other than for ‘alternative covenant schemes’ (ACSs) (eg Superfunds).
Changes proposed in the Pension Schemes Bill (the Bill) will remove the legislative fetters on the PPF’s ability to raise the levy significantly from one year to the next. In doing so, it frees the PPF to be able to raise a minimal, or even zero, levy secure in the knowledge that if there is a significant and unexpected downturn in its funding position it can take action in the next levy year to restore its coffers. Sponsors of schemes will welcome the news as it allows the money that would otherwise have been paid to be used for alternative purposes.
As an aside, the ACS rules will remain largely unchanged from 2025-26 other than a couple of modest amendments such as introducing a discretion for the PPF to take account of any arrangements that reduce underfunding risk.
However, the PPF remains nervous that the proposed changes in the Bill will not make it through the legislative process and wishes to retain the ability to raise a levy – potentially for 2026 and certainly for future years.
The PPF has until 31 March 2026 to finalise its rules and if it is satisfied that the legislative changes are sufficiently advanced and likely to be enacted, it will confirm the rules set out in its consultation and commit to a zero-levy estimate.
As a fall back, in the event that the PPF is not confident that sufficient progress has been made in amending the legislation, it plans to replicate the 2025-26 levy rules. This includes still making an ‘estimate’ of the intended levy of £45 million based on existing data (including measurement times, factors and rates), but with the ability to adjust this to raise an actual levy of zero.
The relevance of this distinction is that the problematic existing legislation refers to the PPF being restricted to increasing the levy estimate from one year to the next – not the actual levy imposed.
As the net result should still mean that the levy, for all but ACSs, is zero, the foregoing is, arguably, of technical interest only. What schemes and sponsors will be more interested in is the necessity for commissioning and paying for future PPF-related work.
The consultation addresses this by confirming that, for the time being, schemes will still need to complete s179 valuations and PPF-related entries into the Exchange (scheme return) as normal. Similarly, it remains necessary, for now, to capture insolvency risk data through D&B scores. However, both the PPF and The Pensions Regulator are considering their data needs going forward and the expectation is that the burden on schemes will be reduced at some future date. The PPF seeks views from stakeholders on these matters, including whether schemes/sponsors use this information for other purposes. Similarly, the PPF asks whether access to the contingent asset forms is useful “beyond just for PPF levy purposes”; ie as a model for use in funding agreements.
The consultation runs to Monday 5 January 2026 and the PPF expects to publish its policy statement and final rules “in early 2026”.
