On 13 December the Pension Protection Fund (“PPF”) published its levy determination covering the levy to be charged to schemes for the year commencing 1 April 2023. They estimate that they will collect a total levy of £200m in that year, down from £390m in 2022/23, and that 98% of schemes will see a reduction in their levy. In fact, it expects “the majority” of schemes to see a fall of more than 50% in their risk-based levy.
The risk-based levy takes account of the sponsoring employer’s estimated insolvency risk, for which there are 10 bands. The PPF has announced that it will reduce the volatility associated with a move between bands by halving the increase in levy that applies to the move. Another element of the risk-based levy is the levy scaling factor, which will be reduced from 0.48 to 0.37. The risk-based levy will continue to be capped at 0.25% of the value of the scheme’s protected liabilities.
The other part of the levy is the scheme-based levy, calculated as the value of the scheme’s protected liabilities multiplied by a Scheme-based Levy Multiplier. That Multiplier is to be reduced from 0.000021 to 0.000019, a reduction of about 10%.