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PPF 2024/25 levy rules finalised: UK DB schemes’ levy halved to £100m, minimal changes, simplified SCE treatment, reduced rating providers, key deadlines, and potential legislative reform

Published on: 08 January 2024

Published by a LexisNexis Pensions expert
Legal News
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Article summary

What was the background to the PPF's consultation on the 2024–25 levy rules?

Created under the Pensions Act 2004, the Pension Protection Fund (PPF) provides compensation to members of qualifying defined benefit (DB) occupational pension schemes, including the DB section of hybrid arrangements, when certain criteria are satisfied:

  • the sponsoring employer experiences a qualifying insolvency on or after 6 April 2005
  • the scheme’s assets are inadequate to secure benefits at PPF compensation levels

Except where an exemption applies, every UK DB occupational scheme is required to pay an annual levy to the PPF. This levy comprises a scheme-based component and a risk-based component. The scheme-based part mirrors the membership headcount and the size of the scheme’s liabilities. The risk-based part reflects the extent of any funding shortfall and the likelihood of the scheme entering the PPF during the levy year. Together, these statutory provisions frame the context for the 2024–25 levy rules consultation...

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