Alan Rubenstein, chief executive of the Pension Protection Fund (PPF), has announced that the pension protection levy estimate for 2012/13 will be £550 million, its lowest level to date

Alan Rubenstein (pictured), chief executive of the UK's Pension Protection Fund (PPF), has announced that the pension protection levy estimate for 2012/13 will be £550 million, its lowest level to date.

Speaking at the Professional Pensions show in London on 21 September, Rubenstein confirmed that the levy marks a reduction from £600m in 2011/12, and is the second cut in as many years made by the UK scheme lifeboat.

The PPF also stated today that it began consulting on the rules governing its new levy framework, which will come into effect for the first time in 2012/13. These rules are needed to calculate individual levy bills and are intended to be fixed for three years.

"Schemes can expect that if their risk falls over the three years, then so will their levy," said the PPF in a statement. "The rules are also designed to make the levy more stable."

Speaking to Pension Funds Insider in June, Rubenstein said: "What we're trying to do is develop a levy that charges everybody according to the individual risk they pose to the PPF, what we call the 'bottom-up' approach."

The PPF says it remains on course to reach self-sufficiency by its 2030 target. "The £400 million surplus we posted last year showed that we remain on course for achieving our aim of being financially self-sufficient by 2030. And we expect to have built on that strong foundation when we announce our 2010/11 results later in the year," Rubenstein said today.

He advised schemes to take various risk reduction measures as "they have a direct impact on the amount of levy they pay".

In response to the announcement, Joanne Segars, NAPF Chief Executive, said that the UK industry body welcomed the news.

"Pension managers and finance directors will be pleased to see the levy has come down for the second year in a row," she said.

"This helps give some respite from the heavy financial pressures of running a DB (defined benefit) scheme, especially when the economy is so weak."

A word of caution, however, came from Nick Griggs, a partner at Barnett Waddingham.

He said that sponsoring companies of defined benefit schemes still had to recognise that their levy invoices would not all necessarily be lower as a consequence.

"The PPF has made some significant changes to the levy calculation and there will be winners and losers. Schemes should already be considering any action that can be taken to reduce their levy as the D&B credit scores that will be used in the 2012/13 levy calculation are already being collected," he cautioned.

azeevalknink@wilmington.co.uk