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PPF will hold levy at £700m

The Pension Protection fund has announced that its levy will remain stable for 2009/2010.

Last year, the PPF said it would set a levy estimate of £675m for the next three years, indexed to wages, so long as there was no significant change in risk.

Despite current market conditions, the PPF says that the levy for 2009/2010 will remain at £700m, which is £675m plus indexation.

In addition, it has also proposed a levy scaling factor of 2.22, in advance of the 2009/2010 levy year.

This figure is subject to consultation but is unlikely to change when it is confirmed in November.

Watson Wyatt head of defined benefit consulting John Ball says : “The Pension Protection Fund has clearly learnt from last year’s experience when its unexpected increase in the scaling factor caused the large jump in the levy that pension schemes were forced to pay”.

Ball says employers will welcome the intention to hold the levy at broadly the same level, particularly given comments made a few months ago that the credit crunch might give the PPF an excuse to increase the levy.

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