The Pension Protection Fund has finalised its method for calculating the 2008 levy but Aon Consulting says this leaves little time for companies to try and reduce their levy.
Aon says it is pleased the PPF has taken on board the views of the industry on this issue as previously some areas of its methodology were complicated and confusing.
Consultant & actuary Milan Makhecha says: “However due to the timing, it does leave companies and pension schemes with little time to spare in order to take mitigative action towards reducing their levy.
“Although the PPF will not publish its final scaling factors until May – after the measurement date of 31 March 2008 – companies and pension schemes now have all the rules and methodology to be used by the PPF in order to estimate their levies and take appropriate action.
“We believe there is a real opportunity for reducing company levies, but time is of the essence. In particular, the PPF has overhauled its approach to contingent assets so that a parent company can now clearly calculate the effect of a guarantee to fund the deficit in its pension scheme and this can reduce the levy by substantial amounts. In some cases we have already seen reductions of 90 per cent.”