Employers with high-risk schemes will have to pay a higher levy if they want to reap the benefits of the proposed Pension Protection Fund (PPF), but not until the second year the legislation is in effect, says Andrew Smith MP, Secretary of State for work and pensions.
According to a factsheet explaining the Pensions Bill published today, at least 50% of the levy for the PPF will be linked to risk factors, such as levels of under-funding, credit ratings and investment strategies. This means funding costs will be minimised for "good employers" while well-funded schemes will want to use the Fund to protect their members from future mishaps. However, in the first year of operations, the funding of the PPF will be solely linked to scheme factors, such as numbers of members and the balance between active and retired members. What is not clear is how PPF...
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