Sponsors and trustees continue to have doubts about the sustainability of the pension protection fund (PPF) as a standalone entity, according to research conducted by Barnett Waddingham.
Many of the respondents to the actuarial and consultancy firm’s third annual PPF survey said that the methods for assessing the levy are not a fair reflection of the risks posed by their schemes.
There is some evidence, however that more employers are accepting some of their concerns will be addressed by the new levy structure that will apply from 2012/13 onwards.
The majority (85%) of respondents support the existence of some form of discontinuance fund as a means of providing additional security on sponsor insolvency. Only 30% of respondents agreed with the PPF being funded solely by a levy on pension schemes without an additional government subsidy.
Meanwhile, a quarter of respondents said that the levy structure represents a fair sharing of costs between schemes (up from 6% in 2008 and 14% in 2009) and that the current system for assessing employer strength is a fair reflection of the relative risks.
Nearly 30% of trustee or employer representatives continue to suggest that the PPF levy could seriously jeopardise the future of their business. This is a similar level to previous years.
Nick Griggs, partner at Barnett Waddingham, said: “One of the major issues raised by our survey has been the issue of year on year volatility in the levy. In last year’s survey around half of respondents felt that stability in the PPF levy was more important to employers than the absolute amount they were asked to pay.
“The PPF has recognised this and has looked to address the issue in the revised calculation framework that will apply from 2012/13 onwards.”
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