PPF raises level of funding level required for schemes to avoid levy

The Pensions Protection Fund has raised the funding level required for schemes to escape having to pay its risk-based levy to 140%, from 125%.

PPF chairman, Lawrence Churchill, said: “We recognise with these changes that even well-funded schemes pose long-term risks to the PPF.”

The PPF estimates that it needs to collect £675m in pension protection levies in the period 2008 to 2009 – the same amount as for 2007 to 2008.

It says that the levy estimate will now remain stable for the next three financial years, subject to it being indexed against average earnings. However, if there is a significant change in the level of risk faced by the PFF then its estimates will have to be amended.

The National Association of Pension Funds has welcomed the PPF’s efforts to stabilise the levy. However its chief executive, Joanne Segars, added: “Over the long-term, as schemes reduce any funding deficits, the balance between levies charged to well-funded and under-funded schemes must be kept under review. It is important that well-funded schemes feel that they are being treated fairly.”