A long-time friend hits the nail on the head in an FT article on the PPF levy. This is very precise thinking.
Jo Shepard
“The PPF is requiring employers — who typically pick up the cost of levies — to hand over £100mn that it very much expects not to need, without a mechanism for paying the money back,”
said Joanne Shepard, head of PPF consulting with WTW, which advises pension schemes.
“If levy payers’ contribution to the PPF’s war chest is money they are unlikely to see again, it adds insult to injury to continue charging meaningful amounts.”
The PPF’s finances are pretty pucker, as we’ve been finding from its report and accounts
Con Keating and Iain Clacher report them “actuarial with the truth“.
The awkward truth for the PPF is that if it drops the levy any lower, its capacity to increase if- if needed – will be so reduced it may not be able to respond to a very large series of claims.
The logic of this makes little sense to any ordinary person. If we consider the boat has sufficient lifeboats, do we expect it to carry lifeboats for the fleet?
Chicken Licken was wrong in predicting the sky was going to fall on her head. TPR shouldn’t aspire to preside over the safest graveyard and the nation has to get productive again.
Our wages pay the levy
The wages we have today fund the wages we get tomorrow, that is how pensions work. If you syphon off some of the money to pay wages to pay an unnecessary PPF levy, you reduce the wages for tomorrow. The PPF grows fat on money that should have been dedicated to deferred pay – PENSIONS.
Which is why , whoever takes over as CEO of the PPF (following Oliver Morley’s departure) , will have some explaining to do. The affable and intelligent David Taylor is the bookie’s favourite. He will see the conflict between feathering the PPF’s Nest and maximising the productive capital available to the sponsors of DB schemes.
And the wages that employers pay in future depend on the future performance of those companies. If companies pay away money that would otherwise have been invested in Research and Development to fund “the wet cement of institutional rigidity” at the PPF, then there won’t be jobs at all.
Our wages pay the levy, the wages we get today , tomorrow and in retirement.
On your head – Bim Afolami
The author of the colourful language is Bim Afolami, Economic Secretary to the Treasury , who recently told a meeting I was at that he would be demanding each regulatory head report regularly on progress made to increase productivity in the British Economy.
Here is an open goal for TPR CEO , Nausicaa Delfas. Rather than over- protecting the PPF , she should be demanding that the PPF reduce the levy to zero to protect people’s jobs and future pensions.
She should prevent the PPF building up a war-chest to be as justification for becoming the state consolidator of small DB pension schemes, as the PPF says it wants to do from 2026. This is not the job of a privately funded public sector monopoly.
There are many things that the PPF could do with excess funds. They include improving the benefits of its existing membership, using its solvency to invest more productively itself and in so doing to create the super-solvency that incentivises the sponsors of DB schemes to see pensions as an asset rather a liability.
