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PPF levy determination 2011/12
December 2010
The full determination for the 2011/12 levy was released on 17 December 2010 and confirms the proposals in the draft determination. For more details on the calculation for 2011/12, see here. Please visit the other sections of this site for further details on the levy for 2011/12 and for details of future proposals please see the Breaking News section.
The PPF also published final versions of the guidance notes on contingent assets and on how it will use its discretionary powers in relation to levy calculations.
October 2010 – draft determination for 2011/12/levy
The Pension Protection Fund (PPF) has published a consultation and draft determination in relation to the 2011/12 PPF Levy.
The PPF is proposing to set its levy bill at £600m for 2011/12 (a reduction of £120m on 2010/11). The move is the PPF’s “first response” to Government plans to increase PPF compensation in the future in line with the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI). It warns, however, that this “is a reduction that could be reversed in a single year should circumstances require”.
The PPF has also said that it will:
- increase the cap on the risk-based levy from 0.5% of section 179 liabilities to 0.75%
- will amend the “taper” so that schemes above 155% funded (2010/11: 140%) pay no risk-based levy and schemes over 135% (2010/11: 120%) will pay a reduced levy
- estimates that the levy scaling factor will be 2.07 for 2011/12 (1.64 in 2010/11)
- estimates that the scheme based multiplier will be 0.000135 for 2011/12 (0.000145 in 2010/11)
- would like to remind schemes that there is still time to submit information in relation to contingent assets and deficit reduction contributions to affect the 2011/12 levy
- will, as planned, use 31 March 2010 as the measurement date for insolvency and underfunding risks for the 2011/12 levy
The Board of PPF has said that the changes to the cap and taper were necessary to “maintain a fair distribution of the levy” and to continue to cap the risk-based levy of 10% of schemes. It also confirmed that changes consulted on in November 2009 are to be incorporated as planned. In particular, a new UK probability of insolvency table will be adopted for 2011/12 levies.
Alongside the consultation, the PPF has published updated guidance on how it will use its discretionary powers in relation to levy calculations. It has also updated its contingent assets guidance , although it confirms that (despite changes to the taper, described above) there are no changes to the rules for contingent assets.
Comments on the 2011/12 proposals should reach the PPF by 4 November 2010. The PPF has published its proposals on changes to the formula for the 2012/13 levy – see the Breaking News section of this site for a brief summary.