The Pension Protection Fund has confirmed it will not include investment risk as part of the risk-based levy.
In a speech to the National Association of Pension Funds’ (NAPF) annual conference, Partha Dasgupta, chief executive of the PPF, revealed the results of an industry consultation on the issue supported its initial conclusion that to include investment strategy in the risk-based levy would be “inappropriate”.
The consultation, which closed on 27 January, revealed 60% of the 28 formal responses were against the introduction of investment risk as a risk factor, while two-thirds believe the impact of investment risk is limited.
As a result Dasgupta says it would be inappropriate to introduce an investment risk factor into the risk based levy calculation at this time in light of the PPF’s finding that the resulting cost to pension schemes would be “disproportionate” to the 3% reallocation of the levy it would cause.
At the moment the risk-based levy, which forms at least 80% of the overall PPF charge, takes into account the level of scheme underfunding and the likelihood of the sponsoring employer becoming insolvent, although the PPF has the option of considering investment risk as an additional factor.
To make any comments on this story contact:
Tel: 0207 034 2681
Email: [email protected]
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till