Invoices have now been issued to trustees of all DB pension schemes by the Pensions Regulator for the Administration & General Levy. This is the more affordable of the two levies that DB schemes have to pay each year, the other one being the levy for the PPF which will be invoiced in September 2017.
The administration and general levy is usually made up of two elements. As the name suggests, there is the administration levy covering the cost of the PPF’s activities and there is the general levy covering the cost of running various pensions bodies, including the Pensions Regulator. Every so often there is a third element included in the levy invoice, for the Fraud Compensation Fund. The last time a FCF levy was charged was five years ago. This element has been included again in the 2017 invoices.
All of the individual levies are based on a count of the total membership of the scheme. The invoice will be settled either from the trustees’ bank account or paid by the sponsoring employer.
PPF Administration Levy
This is collected by the Pensions Regulator on behalf of the PPF and covers the cost of the Board of the PPF’s activities. This levy is based on the total number of members in the scheme at the end of the scheme year as recorded on the latest Scheme Return. The amount paid depends on the band which the scheme falls into and may be subject to a minimum amount per band. Example bands are as follows:
12 – 99 members £4.88 per member
100 – 999 members £3.52 per member
This is in place to cover the cost of running the Pensions Regulator, the Pensions Ombudsman Service and the Pensions Advisory Service and the Secretary of State for Work and Pensions sets the rate of the General Levy each year. This Levy is calculated the same way as the PPF Administration Levy but can use a different set of bands.
12 – 99 members £2.88 per member
100 – 999 members £2.08 per member
Fraud Compensation Fund Levy
The FCF was established under the Pensions Act 2004 to provide compensation to DB and DC occupational pension schemes, with insolvent employers, that suffer a loss that can be attributable to an offence involving dishonesty. The FCF is funded from the FCF Levy and is included with the General Levy and PPF Administration Levy in occasional years, not every year. A FCF Levy is to apply for 2017-18, with the rate being set at £0.25 per member. The last time a FCF Levy was charged was in 2012-13 at the same rate of £0.25 per member.