Chief Executive of the Pension Protection Fund, Alan Rubenstein, announced today that the pension protection levy estimate for 2012/13 will be £550 million.This is the lowest levy that the PPF has ever set and marks a reduction from £600 million in 2011/12, the second cut in two years.
Alongside this announcement, the PPF began consulting on the rules which will govern its new levy framework coming into effect for the first time in 2012/13 and are needed to calculate individual levy bills.
In a significant break from the past - when the PPF changed the way the levy is calculated every year - these new rules are intended to be fixed for three years.
This means that levy bills will be more predictable then ever before and schemes can expect that if their risk falls over the three years, then so will their levy. The rules are also designed to make the levy more stable.
Speaking at an industry conference, Alan Rubenstein said:
"The further reduction in the amount of levy we want to collect again recognises our desire to protect employers and pension schemes which are still navigating choppy waters - while remaining mindful that we also have to protect our own financial position.
"That said, the £400 million surplus we posted last year showed that we remain on course for achieving our aim of being financially self-sufficient by 2030. And we expect to have built on that strong foundation when we announce our 2010/11 results later in the year.
"We are also delighted that we can finally put in place the rules for our new levy framework which enable schemes to plan for their levy bills for the next three years. I would also encourage schemes to take risk reduction measures as they have a direct impact on the amount of levy they pay."
The PPF confirmed the details of its new pension protection levy framework earlier in the year.
The levy is paid by all eligible defined benefit, eg final salary, pension schemes to fund the compensation the PPF pays to people whose employers have become insolvent and their pension schemes cannot afford to pay the pensions they promised.