The Pension Protection Fund’s today announced a levy estimate of £700 million for 2009/10.
It confirmed its commitment to last August’s promise to set the levy estimate of £675 million for the next three years, indexed to wages, so long as there was no significant change in risk.
The PPF has also proposed a levy scaling factor, which schemes can use to calculate their individual levy bills of 2.22, in advance of the 2009/10 levy year. Although this figure is subject to consultation, the PPF said it does not expect it to change when it is confirmed in November.
PPF chief executive, Partha Dasgupta, said: “We have done what we said we would do and proposed the same levy estimate as last year, indexed against wages. This was not an easy decision but we believe it is one we had to take to help reduce the burden on levy payers, particularly during the current economic downturn.
“That is why we also have kept our promise to publish the levy scaling factor number in advance of the 2009/10 levy year. This will help levy payers with their financial planning and provide further certainty.”
Jane Beverley, head of research at Punter Southall welcomed the announcement, saying: “This is an important test of the PPF’s levy calculation method. The consultation document is encouraging and suggests that the PPF has learned the lessons of the disastrous 3.77 factor for 2008/09.
“So long as the PPF does stick with the 2.22 scaling factor, it will start the process of rebuilding bridges with pension schemes and their sponsoring employers.”
The levy estimate and scaling factor number published today are now subject to consultation – and pave the way for the PPF’s proposals for the long-term future of the levy which will be unveiled during October.