Following a consultation launched in September, the Pension Protection Fund (PPF) has published its 2014/15 Levy Determination and confirmed that the 2014/15 pension protection levy estimate will be £695 million, as originally proposed.
The 2014/15 levy is the last to be set under the first three year period of the new levy framework implemented in 2012/13.
The Determination, which sets out the Levy Rules, confirmed that the levy scaling factor and the scheme based levy multiplier will remain unchanged from the previous year at 0.73 and 0.000056 respectively.
The PPF has also confirmed the outcomes for the issues it consulted on and set out the key dates and deadlines for 2014/15 levy year.
Experian
In July, the PPF announced that it will be appointing Experian as its new insolvency risk provider from 2015/16, the start of the next three year period for the levy, replacing current provider, Dun & Bradsteet.
The PPF is now working with Experian to develop a scoring methodology which can improve transparency for levy payers and provide a better fit for the PPF universe.
Also, the PPF is working with an industry steering group to evaluate the new scoring methodology as part of a broader review of the levy. Development work continues and the PPF intends to consult in Spring 2014.
The PPF recognises that schemes will need time to understand the new model and there will be a familiarisation period during which schemes and employers can challenge the data held by Experian before it is used in the levy.
Dun & Bradstreet methodology change
After the levy consultation was published, the PPF became aware that D&B, as the current insolvency risk provider for the PPF, will be introducing a new scoring methodology for the UK from the beginning of 2014 and would not be able to supply UK scores on the existing basis.
After careful consideration, the PPF has decided that it will not make changes to the Levy Rules because of this issue which means the new scores will be included in the 12 month average calculations in the same way as the previous failure scores.
Key dates and deadlines
Information from scheme returns submitted by 5pm on 31 March 2014 will be used to calculate individual levies. The Pensions Regulator’s Exchange system will continue to be the sole point of data submission for the purposes of the PPF levy – and submissions can be made from the New Year.
Insolvency risk will be measured using the average failure score of each sponsoring employer measured on the last working day of each month, from 30 April 2013 to 31 March 2014.
The deadline for certification and/or re-certification of contingent assets will be 5pm on 31 March 2014.
Deficit reduction contributions that have been made up to and including 31 March 2013 must be certified by 5pm on 30 April 2014.
Full block transfers that have taken place up to and including 31 March 2014 must be certified by 5pm on 30 June 2013.
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