PPF publishes Policy Statement and consultation on levy changes for 2018/19
Published on 27 September 2017, the Combined Third Triennium Policy Statement and 2018/19 Consultation Document confirms the PPF will implement the proposals for the Third Triennium (2018/19 to 2020/21) as consulted upon in March 2017 (covered in April’s issue of Compass), with only limited change.
The March consultation called for evidence regarding the possibility of incorporating good scheme governance as a factor in the levy. It has been decided that it is currently too difficult to measure governance in a clear way that could impact a levy factor.
The current consultation seeks views on the draft levy rules for 2018/19 including revised levy rates for Bands 1 to 3, revised asset and liability stresses and simplification of the reporting requirements for certain types of transfers.
The PPF anticipates:
- a levy estimate of £550m for 2018/19, a reduction of more than 10% on the previous year and the lowest ever set;
continuing with an unchanged Levy Scaling Factor (LSF) of 0.48 and Scheme-based Levy Multiplier of 0.000021 (meaning that the scheme-based levy should constitute about 5% of the total levy);
setting the Risk-Based Levy Cap at 0.5% of smoothed liabilities, a reduction from the current level of 0.75%; and
setting levy rates to start at 0.28 for band 1 (instead of 0.17 currently) and to rise to 0.40 for band 4 (as now).
The impact analysis shows that overall the effect of the proposals are very similar to those shown in the March consultation:
around three-fifths of schemes would see a lower bill than under the existing Levy Rules;
around one in five schemes would see a higher bill;
schemes with employers remaining in the same band or seeing a single band worsening will see a lower levy from the move to new scores and levy rates;
SMEs in aggregate would see a reduction in levy of over 30%; and
some schemes supported by larger employers would see an increase in levy.
The closing date for the consultation is 1 November 2017 and the conclusions are expected to be published by the PPF before the end of 2017.
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