Pension Protection Fund (PPF) - 2013/2014 levy calculationWednesday, November 14, 2012
The PPF has confirmed its Levy estimate for 2013/14 and also consulted in relation to the basis on which the 2013/14 Levy will be calculated. The Levy estimate for 2013/14 is £630 million, increased from £550 million in 2012/13.
The increase is stated to be attributable, among other things, to the increased risk over the last year to the PPF. The PPF has also indicated that levy payers can expect to see further increases in the Levy in 2014/15 and thereafter. The PPF anticipates that there will be an increase of around 10% in 2014/15 if the current high risk conditions continue through to March 2014.
Despite this year introducing its "New Levy Framework" to fix Levy rules for three years, the PPF has said that the levy scaling factor and the scheme-based levy multiplier will both be reduced.
The PPF notes in its consultation document that since its introduction of the new certification requirements for Type A Contingent Assets (parent company guarantees), they have seen a notable decline in the use of such assets. As a result, the PPF will be updating its guidance in respect of the new certification requirements for Type A Contingent Assets. Changes will also be made to relax the requirements for guarantors and custodians for Type B Contingent Assets (security over real estate) and Type C Contingent Assets (letters of credit) to recognise the downgrading of bank credit ratings of many financial institutions.
There are no material changes to the key Levy dates, except that the deadline for submitting deficit reduction contribution certificates has been relaxed from five working days into the Levy year to the last working day of April.