The Pension Protection Fund—the pension protection levy
Produced in partnership with Wyn Derbyshire of gunnercooke LLP
The Pension Protection Fund—the pension protection levy

The following Pensions guidance note Produced in partnership with Wyn Derbyshire of gunnercooke LLP provides comprehensive and up to date legal information covering:

  • The Pension Protection Fund—the pension protection levy
  • Funding the PPF
  • Who has to pay the pension protection levy?
  • Levy framework
  • What is the pension protection levy made of?
  • Calculation of the scheme-based levy
  • Calculation of the risk-based levy
  • The risk-based levy—measuring insolvency risk
  • Reducing the risk-based levy
  • PPF levy data correction principles
  • more

FORTHCOMING DEVELOPMENT: On 19 December 2019, the Pension Protection Fund (PPF) launched a consultation on a new Dun & Bradstreet (D&B) methodology for the calculation of PPF levies with effect from the next triennium (starting in levy year 2021/22). While the new D&B methodology will use largely the same approach as Experian, there will be some differences. For more information, see News Analysis: PPF consults on new D&B insolvency risk methodology for next triennium.

The Pension Protection Fund (PPF) is a statutory fund established under the provisions of the Pensions Act 2004 (PeA 2004) whose principal purpose is to provide compensatory benefits to members of eligible defined benefit (DB) occupational pension schemes where:

  1. the scheme’s sponsoring employer(s) has suffered a qualifying insolvency event, and

  2. the scheme’s funding position is such that its net assets are less than its ‘protected liabilities’. Broadly speaking, protected liabilities are measured by reference to:

    1. the cost of securing members’ benefits corresponding to the levels of compensation the PPF would provide if it accepted responsibility for the scheme

    2. other (non-benefit related) liabilities of the scheme, and

    3. the estimated cost of winding-up the scheme

For further information, see Practice Notes: The Pension Protection Fund—an introduction and The Pension Protection Fund—eligibility and entry.

Funding