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Daily Insurance Industry News
Tuesday 21st of May 2019
October 12, 2008

PPF proposals on pension protection levy and risk

by Gill Montia

Story link: PPF proposals on pension protection levy and risk

The Pension Protection Fund (PPF) has set out the principles upon which proposals for the long-term future of the pension protection levy will be based.

In a speech made last week at the National Association of Pension Funds’ annual conference, Martin Clarke, the PPF’s Director of Financial Risk, explained that when the risk based levy was first introduced in 2006, the PPF had little information about exposures to risk.

The scheme was therefore simplistic. However, a greater understanding of risk has now developed, prompting the PPF to recognise that it needs to achieve greater fairness in calculating the levy.

Proposals to re-evaluate the situation are expected in late October and will be subject to a three month consultation.

The proposals will continue to recognise the short-term risks that schemes pose to the PPF and add a component to the risk-based element of the levy, to reflect a scheme’s contribution to the long-term risks that the PPF faces, even from well-funded schemes.

This will be achieved by taking into account a scheme’s investment strategy and credit risk over time.

The move has the potential to reduce the scheme-based element of the levy, and offer greater year-on-year stability in individual bills.

 

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