
	How the levy is calculated

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Determining your PPF surplus or deficit

For PPF levy purposes, a scheme's liabilities are measured using a gilts-based approach to discount future payments, together with a reserve for the PPF’s expenses. The pension payments included in this assessment are limited to the PPF’s prescribed level of benefits. The resulting "Liability Value" is similar to the price that an insurance company would charge to guarantee the PPF benefits from a scheme.

The difference between the liability value and the scheme assets (allowing for any approved contingent security) determines the size of the risk that you pose to the PPF. If you have a surplus of assets over the liabilities (up to 155% funded) then you still need to pay a share of the risk based levy, as the PPF considers that there is still a risk that you may become eligible for compensation from the PPF in the future.

Prior to 2011, schemes that were over 140% funded did not have to pay the risk based levy, but this cut-off point was extended to 155% for this year.

In order to limit the burden placed on the weakest schemes, a maximum limit is set for the risk based levy, at 0.75% of the PPF liability value (this limit was 0.5% for the 2010/11 levy).

By varying the maximum levy for the weakest schemes and the cut-off point for better funded schemes, the PPF varies how the levy is shared between schemes. The PPF is continuing to review its policy on how the levy is shared.

The PPF uses data from the Pensions Regulator to assess the liabilities and assets of each scheme. For more information click here.