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Your 2010/11 Levy
Your 2010/11 Levy Invoice - calculation approach
The PPF has published details of their approach for calculating schemes’ levies that will become payable late in 2010.
For 2010/11, the PPF levy will again be made up of two parts; the scheme-based element and the risk-based element.
The scheme-based element for 2010/11 will be calculated as:
0.000145 x L
L is the liabilities from the most recent section 179 valuation adjusted to 31 March 2009, using the PPF’s published methodology.
The risk-based element will be calculated as:
0.8 x U x P x 1.64
U is the underfunding risk and P the probability of insolvency. The figure of 1.64 is the PPF's scaling factor for the calculation of 2010/11 levies, and the multiple of 0.8 is to reflect the PPF’s target that the risk based element makes up 80% of the total levy collected. U will be calculated as 1.21 x L – A for schemes which are less than 120% funded, where A is the asset value adjusted to 31 March 2009 using the PPF’s published methodology. U is zero for schemes with funding levels in excess of 140% and tapers away to zero for schemes funded between 121% and 140%. P is the probability of insolvency which is determined by reference to the D&B failure score. The PPF has proposed an updated approach to mapping overseas companies’ D&B scores onto the UK scale.
The risk-based element will be capped so that it does not exceed 0.5% of the liabilities (L).
Please click here for a newsletter setting out the PPF’s approach.