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Changes demanded to PPF levy structure

Question: Should the PPF levy formula be changed to minimise big rises expected next year?

 

Just under six out of ten respondents believe the PPF levy formula should be changed in light of growing concern that next year’s increase could be as high as 25%, according to Accountancy Age’s sister title Professional Pensions Online, 25 July.

Several participants said the best way to achieve this would be to reduce the scaling factor used when calculating levies.

“When companies are struggling, a large increase in the levy could make those companies go into administration – so the increase in the levy could be self-defeating by making more schemes end up in the PPF,” said one contributor.

A respondent added: “Well-funded schemes are being put at risk to bail out companies and individuals who have not saved enough within their schemes to pay benefits. Enough is enough – the fund is not an endless pit!”

Another contributor said levy changes should not be a surprise, year on year, and called for them to be smoothed to assist companies’ cash-flow planning.

But more than a fifth of respondents rejected the calls to change the formula. One explained that it had been obvious for some time that a large rise was on the way and said schemes should be prepared.

Another respondent added: “As movements towards consistency are to be welcomed, I hope that the PPF keeps its knees under the table and continues to take its anti-jerk pills.”

Click here for this week’s Pensions Buzz results in full


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