The Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2025
Introduction
On February 3, 2025, the UK government issued the Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2025. This Order sets the maximum amount that the Pension Protection Fund (PPF) can levy on occupational pension schemes in the year 2025/26.
Key Points
The key points of the Order are as follows:
- The maximum levy ceiling for the year 2025/26 is set at £1.3 billion.
- This represents an increase of £50 million (4%) from the previous year’s levy ceiling of £1.25 billion.
- The increase is intended to cover the PPF’s rising costs, including the costs of compensating members of failed pension schemes.
Background
The PPF is a lifeboat scheme that provides compensation to members of defined benefit pension schemes that become insolvent. The PPF is funded by a levy on occupational pension schemes that are not closed to new members.
The levy ceiling is set annually by the UK government. The level of the levy ceiling is intended to balance the need to provide adequate funding for the PPF with the need to keep the levy burden on pension schemes manageable.
Implications
The increase in the levy ceiling will mean that occupational pension schemes will have to pay higher levies in the year 2025/26. This could have a knock-on effect on the investment returns of pension schemes, as they may have to reduce their risk profile in order to meet the increased levy payments.
Conclusion
The increase in the PPF levy ceiling is a reminder of the challenges facing defined benefit pension schemes in the UK. The PPF is an important safety net for members of failed pension schemes, but it is also essential that the levy burden on pension schemes is kept manageable.
The Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2025
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UK New Legislation a new article on 2025-02-03 14:44 titled “The Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling) Order 2025”. Please write a detailed article on this news item, including any relevant information. Answers should be in English.
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