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01 Oct 2012

Pension Protection Fund Keeps Protection Levy At £630 Million

The Pension Protection Fund (PPF) said last week that it expects to collect £630 million in pension protection levy for 2013/14, the same level as the amount estimated for 2012/13.

PPF chief executive Alan Rubenstein said there had been a significant deterioration in pension scheme funding over the past 18 months, with claims for the current year already above the annual levy. The increased risk level could have justified a rise in the levy estimate, he added, but the PPF made an exception in view of the tough economic environment and its impact on employers and decided to hold the levy estimate at a similar level to this year's.

Rubenstein also said that certified deficit reduction contributions and contingent assets, used by schemes to lower their risk and levy bills, had declined in the current year as a result of the heightened risk level, which was why the aggregate levy amount estimated for 2012/13 had been raised by £80 million above the initial calculations of £550 million.

In spite of the latest decision, the PPF would raise the levy in future if the current risk environment remained unchanged, Rubenstein noted, because it needed funds to protect pension schemes.

In addition to the levy announcement, the PPF also released a consultation document on the formula for the 2013/14 pension protection levy. The fund is to unveil the results of the consultation in December, when it will also confirm the levy projections.

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