article banner

Key points from the 2019/20 PPF Levy determination

The Pension Protection Fund (PPF) has issued its 2019/20 levy determination. As this is a mid-triennium year, in keeping with its principles it has not made material changes to existing rules. It has, however, added an approach to be adopted for consolidator funds and made some more minor amendments to the 2018/19 approach.

Pension Scheme Consolidators and SWOSS

The potential introduction of several defined benefit (DB) pension scheme consolidators has forced the PPF to consider how a suitable levy would be calculated for such vehicles. Given existing sponsor covenant is exchanged for a capital buffer within these funds, they have decided a levy calculation like that used for schemes without a substantive sponsor (SWOSS) would be suitable. The key differences are that the Risk Based Levy (RBL) calculation will, subject to the consolidator meeting certain criteria, reflect the value of any assets held in a buffer fund, and make allowance for the potential for capital to be removed if relevant.

For both consolidators and SWOSS, the 2019/20 RBL calculation will use an iterative approach, to allow for the fact that the levy payment itself will reduce the assets held in the scheme. The PPF has, however, decided against taking account of potential increase in liabilities from PPF drift.

Deficit Reduction Contributions

Investment expenses do not need to be deducted from the contributions paid when a scheme is determining the deficit reduction contribution (DRC) amount to certify, regardless of whether option alpha or beta is adopted. Previously this has only applied under option beta. In addition, at retirement, Pension Increase Exchange (PIE) options will not be considered as augmentations for the DRC calculation.

GMP equalisation

The PPF has confirmed that no adjustment will be made to the levy calculation to reflect the Lloyds court ruling in respect of guaranteed minimum pension (GMP) equalisation.

Contingent assets

There has been no change to the requirement introduced last year for all Type A and Type B contingent assets with a fixed monetary cap element to be re-executed and re-certified on the revised standard forms by 31 March 2019.

Trend variables

For previous years, an ‘unknown’ score has been awarded for trend variables when a sponsor moves from submitting consolidated to non-consolidated accounts. Following feedback, the PPF has agreed to allow trend variables to be calculated, provided all other subsidiaries were dormant and the previous years’ figures are identical under both approaches.


  • Special Category Employers will be contacted annually to seek confirmation that there has been no change to their status
  • The use of S&P credit ratings will not be extended to include utilities. S&P is, however, re-calibrating its banks sub-model to ensure consistency with its Global ratings. If this is completed before April 2019 the re-calibrated ratings will apply to the 2019/20 levy calculation and will result in a deterioration in score for affected entities
  • Version A8 of the assumptions guidance will be used to assess the liability valuation at the output date
  • The PPF plans to issue invoices in early September 2019, and prior to that will publish criteria for schemes to qualify for a payment plan rather than making an immediate lump sum payment to settle the invoice

Key dates

The deadline for all electronic submissions of information is 31 March 2019, with hard copies allowed until 1 April 2019, with the exception of the following:

  • 30 April 2019: DRC certificates, exempt transfer applications
  • 28 June 2019: Block transfer certificates

In addition, any information affecting the monthly PPF insolvency score should be submitted to Experian one calendar month before the score date.

What can we do to help?

Our PPF team has a combination of accounting and actuarial expertise to analyse the financial information of both the employer and the pension scheme. This allows us to understand the detail behind every single employer and scheme variable and how changes to these can impact on the levy, now and in future. For further information, please contact Paul Brice.

Have your say on defined benefits pension superfunds Find out more
Our services - Advisory Pensions advisory services Find out more
Our services - Audit and assurance Pensions Find out more

Sign up to get the latest pensions updates by email