PwC warns government over insurance levy risk
PricewaterhouseCoopers has warned that the government's proposed insurance levy to protect pension funds should be structured so that poor risks are not subsidised by good risks.
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PwC wants the levy to take into account the amount of risk in trustees’ investments, as well as the size of the pension deficit.
John Shuttleworth, actuarial partner at PricewaterhouseCoopers said: ‘Proper pricing of the levy is important because it is doubly virtuous. Not only is it fair, it encourages sensible funding and investment. Bad pricing encourages the opposite.’
PwC warned that if risk was not properly taken into account, trustees could be seen to be acting in their members’ best interests even if they deliberately gamble with their investments, knowing that if the gamble does not pay off, the mutual insurer would pick up the pieces.