{"id":154135,"date":"2025-09-23T00:21:08","date_gmt":"2025-09-23T00:21:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/154135\/"},"modified":"2025-09-23T00:21:08","modified_gmt":"2025-09-23T00:21:08","slug":"uk-pensions-lifeboat-halts-levy-for-defined-benefit-retirement-schemes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/154135\/","title":{"rendered":"UK pensions \u2018lifeboat\u2019 halts levy for defined benefit retirement schemes"},"content":{"rendered":"

Unlock the Editor\u2019s Digest for free<\/p>\n

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/p>\n

The \u201clifeboat\u201d set up to protect members of UK defined benefit pension schemes has cut the fee to participate to zero this year, after the government took steps to scrap a contentious restriction on how it is set.<\/p>\n

The Pension Protection Fund announced on Tuesday it would remove its levy in 2025-26, saving schemes \u00a345mn in the current financial year. <\/p>\n

It took the action after a bill expected to become law next year amended a rule that prevented the fund from increasing the fee if it was dropped to zero.<\/p>\n

Kate Jones, chair of the PPF, said: \u201cThe legislative changes we\u2019ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year\u2019s levy.\u201d<\/p>\n

The PPF\u2019s ability to meet pension<\/a> obligations has improved dramatically in recent years after a sharp rise in interest rates improved the funding levels of defined benefit pension schemes, by lowering the present value of their liabilities. \u00a0<\/p>\n

According to PPF analysis, there are close to 5,000 DB schemes eligible for the pensions lifeboat. They had a total net surplus of about \u00a3219bn over the amount it would cost to secure PPF-level benefits at the end of March last year. That represents a sharp turnaround from a deficit of about \u00a390bn four years previously.\u00a0\u00a0\u00a0<\/p>\n

The PPF \u2014 set up in 2005 to protect beneficiaries of defined-benefit schemes whose employers become insolvent \u2014 has total assets of \u00a331bn. Close to half of those assets, about \u00a314bn, are on top of the amount it expects it needs to meet its existing pensions obligations. This figure, known as the PPF\u2019s \u201creserves\u201d, is a buffer to protect against claims against the fund in future and to guard against the risk fund beneficiaries might live longer than expected.<\/p>\n

\"Column<\/p>\n

Regulations currently limit annual levy increases to 25 per cent, preventing a zero per cent charge from being reversed if market conditions change in future.\u00a0The new rules include a clause that would allow the PPF to increase the levy by up to 25 per cent of the levy ceiling.<\/p>\n

Pensions minister Torsten Bell said the new rules would \u201csupport better funded pension schemes and greater investment by firms\u201d.<\/p>\n

In 2024-25, DB pension schemes paid an estimated \u00a3100mn in PPF levies, down from \u00a3620mn in 2020-21. In January this year the pensions lifeboat cut its levy estimate to \u00a345mn in the current financial year.\u00a0<\/p>\n

About a third of the PPF\u2019s \u00a331bn in assets have come from investment performance, according to its latest annual report, and about a third from schemes rolled into the fund. Some 23 per cent has come from levies companies have paid to the fund and a further 11 per cent from recovery from insolvency proceedings.<\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this…\n","protected":false},"author":2,"featured_media":154136,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[84,4176,4174,4175,56,54,55],"class_list":["post-154135","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-personal-finance","tag-personalfinance","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/154135","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=154135"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/154135\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/154136"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=154135"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=154135"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=154135"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}