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Your Next levy invoice – Full details of the calculation

The levy is made up of two parts; the scheme based element and the risk based element.

The scheme based element for 2011/12 will be calculated as:

0.000135 x L

L is the liabilities from the most recent S179 valuation adjusted to 31 March 2010 using the PPF’s published methodology.

The risk based element is calculated as:

0.8 x U x P x 2.07

U is the underfunding risk and P is the probability of insolvency. The figure of 2.07 is the published scaling factor for the calculation of 2011/12 levies and the multiple of 0.8 is to reflect the target of the risk based element making up 80% of the total levy.

U is calculated as 1.36 x L – A for schemes which are less than 135% funded, where A is the asset value adjusted to 31 March 2010 using the PPF’s published methodology. U is zero for schemes with funding levels in excess of 155% and tapers away to zero for schemes funded between 136% and 155%.

P is the probability of insolvency which is determined by reference to the D&B failure score.

The risk based element will be capped so that it does not exceed 0.75% of the liabilities (L).