The Pension Protection Fund (PPF) has launched a consultation outlining how it will develop the Pension Protection Levy over the next three-year period.

Starting from 2018/19, the consultation will involve a detailed set of proposals and will be supported by roadshows and webinars.
The consultation outlines proposals to revise how employers are allocated to scorecards, introduce two new scorecards and rebuild existing scorecards where the predictive power has been weaker.

The PPF says these changes aim to improve the predictive power and ensures scorecards are better tailored to company size resulting in SMEs and 'not-for-profits' paying levies that better reflect their risks.

It also proposes to adopt the use of credit ratings for some of the largest employers and a specific methodology for regulated financial services entities, which it says will ensure the best possible assessment of insolvency risk for some of the largest levy payers.

The proposals have been developed in partnership with Experian and through engagement with stakeholders.

Alongside wider suggested developments, the proposals focus on two ways in which the PPF plans to develop the approach to measuring insolvency risk.

David Taylor, PPF general counsel, said: "We know that stability is important to our levy payers, so we have only proposed changes where we believe there is a compelling case to do so.

"This reflects our view – supported by feedback – that overall the current levy framework is working well."

The consultation document is also looking for views on a number of other areas, including those suggested by the Work and Pensions Select Committee in its 2016 report, such as the possibility of a levy discount for good governance, and reducing the administrative burden for smaller schemes.

Another area where the PPF seeks views is on the benefits of continuing with monthly scores or moving to an assessment at 31 March each year from 2018.

Taylor added: "I am looking forward to hearing our stakeholders' views on the proposals in this document."

First published 31.03.2017

Lindsay.sharman@wilmingtonplc.com