The National Association of Pension Funds responded to the consultation on the second Pension Protection Fund (PPF) Levy Triennium. The consultation response builds on the NAPF’s support of the broad principles of the last levy framework (introduced 2012-2013) which established a more direct link between the risk a scheme poses to the PPF and the levy it pays.

The NAPF supports the move to a  PPF-specific model for insolvency risk which better reflects the insolvency risk of those entities sponsoring DB pension schemes. We also welcome the increased transparency and improved processes for submitting information that come with the new model. We believe that it is important that this new facility is communicated to schemes, to ensure that they have the opportunity to fill any information gaps.

However, the move to a new PPF-specific model of insolvency risk is not without its challenges and will lead to a significant redistribution of the levy across the universe, around £200m in aggregate. The dramatic nature of the redistribution could have profound consequences for those outlier schemes that see the greatest increases in levy payments and we would urge the PPF to examine these on a case by case basis and explore ways of reducing the immediate impact for these employers and schemes. Therefore, the NAPF supports the proposed transitional arrangements in the consultation.

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