The PPF has today introduced a 25% cap on increases to its risk-based levy from 2021/22 to 2022/23, providing great relief to schemes whose sponsors’ accounts have been significantly impacted by the pandemic. The PPF’s expected levy take is now down from its original £415m estimate to £390m, but more importantly those schemes that would have been facing a risk-based levy several times higher than last year as a result of Covid-19 factors will now see a more modest rise in levy.
The PPF’s final Determination also confirms that the proposals to improve the insolvency scores for certain credit ratings and to move to the more favourable A10 valuation assumptions have gone through as planned.
LCP Principal Chris Bunford commented: “The pandemic has caused some unfortunate, and in some cases artificially short-term, impacts to sponsors’ insolvency scores that were resulting in very large increases to certain schemes’ levies. The PPF has taken advantage of its strong funding position to implement a simple and pragmatic approach that ensures schemes are not suffering unduly because their sponsors followed Government rules to close for a period. It seems a sensible and considered approach that is great news for schemes with sponsors hit by Covid and will be welcomed by many.”
