The Work and Pensions Committee has published the Pension Protection Fund's response to its report on Defined benefit pension schemes. The PPF has included proposals made by the Committee in its consultation on how the PPF levy should be calculated in future.
Committee welcomes PPF levy calculation changes
The Committee expressed concern that sponsors from the mutual sector and the SMEs could be unfairly disadvantaged by the way the PPF levy was calculated. The PPF said that, under their new proposals:
- "Mortgage age" will no longer be used as a variable. This was dependent on Companies House records. As mutual are not registered at Companies House they would be given a "neutral" score, which could misrepresent the actual risk posed
- The PPF proposals shift some of the levy burden from SMEs to very large companies. This will better reflect the risks posed
- The process of certifying Deficit Reduction Contributions will be simplified, which may make it easier for some SMEs to improve their risk score
The PPF is also, as requested by the Committee, consulting on how good scheme governance may reduce the risk to the PPF and how this might be incorporated into the levy framework.
James Cartlidge MP, Member of the Committee, said:
"The removal of mortgage age from the PPF’s new formula is good news for those mutuals who have been disadvantaged by levy calculations. We are pleased that the PPF has responded to the Committee’s recommendations and, more importantly, the evidence we heard from the sector."