The PPF are proud of themselves at the moment and they have good reason to be.
Here’s what the PPF are saying in more detail
PPF Levy
The inclusion of provisions intended to give us greater flexibility to further reduce the conventional PPF levy are a positive, and important, step forward.
Earlier this year, we confirmed our levy approach for 2025-26. Back then, informed by the government’s signal that it was considering making the changes we need, we acted to reduce our 2025-26 levy estimate to £45m. In addition, we included a new provision in our levy rules to give the Board the opportunity to calculate a zero conventional levy if appropriate legislative changes were brought forward, and sufficiently progressed, in the course of 2025/26.
Now that these measures are being brought forward, we’ll closely monitor their progress as the Bill passes through its parliamentary stages. We’ll take a final decision on the calculation of the 2025/26 levy in line with the new provision in due course and don’t plan to proceed with invoicing until we’ve concluded our decision-making. We intend to work constructively to support policy makers and stakeholders as these measures are considered further. We’ll keep our levy payers informed of progress and expect to provide a further update to schemes by the end of July.
We continue to recognise the vital importance of balancing both levy payer and member interests. We’ll continue to prioritise supporting the government with the proposed changes to the levy and its fresh consideration of our compensation framework, including pre-97 indexation.
Pension Dashboards
We welcome the provisions intended to enable PPF and FAS compensation data to be made available to members on pension dashboards. We’ve long supported the ambition of pension dashboards to help savers better engage better with their pensions, and for PPF and FAS members to be able to see their data when using dashboards.
Terminal Illness payments
The inclusion of provisions to enable us to make lump sum payments from the PPF and FAS to members with a life expectancy of up to 12 months, increased from 6 months as applies currently, is welcome. This change would mean we could provide lump sum payments more quickly to terminally ill members when they need it most.
Nice but….
But there are two things that the Pension Schemes Bill is not properly dealing with, the first- consolidation – I will focus on in a separate blog, the second – at last helping them with indexation on their pensions, I will pass to Terry Monk
Terry Monk and those he represents have reason to feel let down that the PPF is not helping those with pre 1997 Guaranteed Minimum Pensions get increases on their pension. We are closing on 30 years and the record is stuck in the same groove (only old people remember that happening!).
Here is Terry four months ago
The pre 97 people had a promise at the PLSA Edinburgh Conference, a promise that is not included in the Pension Schemes Bill.
It is important that the Government behaves with integrity and does not just play to the crowd. Terry knows that and continues to campaign for those who have no other voice
This is the least sexy end of “pensions” but it is one that needs dealing with. Pension Minister remember that.
Should the PPF not operate in the same way as an occupational pension scheme in surplus and consider surplus distribution?
Would it not be equitable to share the PPF surplus between members and the sponsors (the levy paying employers)?
The pre 1997 Members appear to have the greatest claim to discretionary benefits as they had their benefits curtailed by the legislation establishing the PPF. In nearly all the case the indexation of pre 1997 benefits was in place in the transferred scheme. TPR has now issued guidance that schemes in surplus should consider discretionary increases in any end game strategy. Given the PPF operates under legislation and not with trustees, it does seem unfair that the PPF members do not have the same opportunity to benefit from discretionary powers from a PPF in surplus as they would have had if their scheme had not transferred to the PPF.
Incidentally this also highlights the risk to potential member’s benefits from an buy-out on fixed terms. Perhaps something the PSA should take on board!
I perhaps should declare an interest here as my own occupational pension scheme (mainly all pre 1997 benefits fully indexed under the rules of the scheme) was assessed for PPF transfer at a time of negative gilt yields and was deemed to be 106% funded and was refused entry. Despite further increasingly negative real gilt yields pushing up the insurance company prices, it was bought out with an insurer with PPF plus a tiny fraction benefits with no indexation. So the risk transfer has definitive in my case transferred the risk onto the Member.
With regard the refund of the PPF surplus to the employer (as in an occupation scheme), when I discuss surplus distribution with particularly SME employers, they are not particularly interested in a distribution of surplus out of the pension scheme at this time. Given past history they regard the pension scheme surplus as ephemeral and are concerned about a possible re-instatement of deficit recovery contributions. Also the Members benefiting from any discretionary surplus distribution are no longer their current workforce. They would rather let the scheme “run out” and take any remaining surplus when the last member has left the scheme. In the meantime, they quite like having a pension scheme asset on their balance sheet and hope that loan and capital providers will learn to recognise it as such.
What the SME employers at least, and rather to my surprise, have suggested is that they should have a right to a refund of PPF levy contributions. They consider the PPF surplus has arisen because of excessive demands on employers, both in terms of deficit recovery contributions calculated using an excessive liability measure and also a prejudiced view of the employer covenant reflected in the PPF risk levies (after all employers who have not entered the PPF have now survived without a claim for over 20 years despite what their covenant assessment said). They believe that a proportionate refund of PPF levy contributions would do more for their survival and growth prospects than any possible early release of surplus from the pension scheme.
Thank you Henry for not forgetting the deprived inflation indexing pre-1997 pensioners in the ‘Pensiontheft’ (PAG group)’ who are still not being addressed properly via the WSPC. All we need is what we paid for!