PPF levy management
As the costs of running a defined benefit scheme escalate, sponsoring employers should look for opportunities to limit the demands on their resources.
One such opportunity can be found by reducing the annual levy payable to the Pension Protection Fund (PPF). Although it is usually invoiced to the pension scheme trustees, more often than not the sponsoring employer picks up the not insignificant cost.
While it is not possible to have notable influence over the scheme-based part of the PPF levy, it is possible to reduce the risk-based levy, and Punter Southall’s Employer Consulting team has considerable experience in helping employers minimise this cost.
The risk-based levy is calculated by looking at the pension scheme deficit, the assumed probability of sponsoring employer insolvency, and additional factors set by the PPF. There is considerable scope for Punter Southall to help reduce the calculated pension deficit and the assumed probability of insolvency by:
- using our wealth of knowledge on how credit rating agency Dun & Bradstreet allocates failure scores to each company, and using this insight to improve your score and reduce your levy;
- checking the accuracy of the information supplied by the trustees to the PPF;
- checking for voluntary submissions that would secure additional levy reductions; and
- advising on the actions you can take to reduce the calculated deficit used in the PPF levy calculation.
The PPF aims to collect a set amount in levies each year, so inaction could see your levy increase to compensate for the action taken by other schemes.
Read more about how Punter Southall’s Employer Consulting team helped reduce two schemes’ levies by viewing our reducing PPF levy case study.
For further information contact Kevin Burgess by email or on 0118 977 2277.
