The Pension Protection Fund (PPF) has launched a consultation on the drawdown rules for 2022/23, with a strong funding position and stable drawdown rules resulting in a Â£ 105million drop in the drawdown estimate to Â£ 415million.
The consultation, which is open until Nov. 9, found that 82 percent of plans that pay a risk-based levy are expected to see a reduction, as the PPF’s funding position will allow the levy rules to remain stable and the sampling methodology to remain unchanged.
The consultation also confirmed that measures introduced in 2021/22 to support schemes in the context of the pandemic must remain in place, including adjusting small schemes, the lower cap on the risk-based tax and easement. Covid-19.
The reduction in the levy has been attributed to improvements in plan funding, as well as an update on how plan underfunding will be calculated, and the financial resilience of employers in the face of recent economic volatility.
The lifeboat also highlighted its strong financial position throughout the pandemic and its defensive investment strategy as being “instrumental” in its decision to allow the drawdown estimate to be lowered.
He stressed that he had “bounced back” from the reduced funding level as of March 31, 2020, explaining that while there are still “significant risks” facing the industry, its strong funding position allows it to ” wait to see the level of complaints received, rather than increasing the collection of pre-emptive levies.
PPF General Counsel and Executive Director David Taylor commented: âDespite the continued risk of employer insolvency, improving the funding positions of our taxpayers, as well as our financial strength, means that we can avoid increasing our taxes in a preventive manner and maintain the stability of our proposed levy rules.
âWhile we are pleased to see an overall improvement in plan funding, we are aware of the uncertainties surrounding future insolvency rates and the continued risk of claims, some of which individually could have a significant impact on our reserves.
âIt is therefore essential that we continue to collect sufficient levies so that we can continue to pay our current and future members the compensation to which they are entitled. “
A small number of changes are made to the debit rules, however, including the consolidation of several debit rules that address how plans without
conventional agreement are billed and a review of its approach to derogatory scores for companies that have had a restructuring plan or other insolvency-related event.
The PPF confirmed the plans to consult on the levies earlier this month at the Pension Age Fall Conference, also confirming that the lifeboat is currently in the process of granting a loan with the Treasury. in order to pay debts on the Fraud Compensation Fund (FCF).
The PPF also previously increased the 2021/22 fraud compensation tax on pension plans to 75 pence per member, the maximum level allowed by regulation, after a court ruling clarified that occupational pension plans set up as part of a scam could claim the CLF.