The Pension Protection Fund (PPF) recently published its levy rules for the 2017/18 levy year. The levy rules are provisional as the PPF is still considering whether to add a rule to deal with schemes without a substantive sponsoring employer.

The final levy rules will be issued by 31 March 2017. However, the PPF has stated that, apart from this potential new rule, schemes can rely on the provisional rules as they do not expect to make any other changes. It encourages schemes to act now to mitigate their levy as far as possible.

The levy estimate        

Levy payers will be relieved to know that the levy rules remain largely the same as those proposed in the PPF’s consultation published last September and in the previous years of the second levy triennium. The PPF has confirmed that the  levy estimate for the 2017/18 levy year will remain at £615 million. Likewise, the levy scaling factor (0.65) and scheme-based levy multiplier (0.000021) are  the same as for the 2016/17 levy year.

Changes in accounting standards

The key change to note relates to the UK’s move to the new accounting standard FRS102 (and FRS 101 for subsidiaries of listed companies) which changes how entities value certain assets and liabilities in their accounts. The PPF generally welcomed the new standard as offering a “better view of a company’s financial health and renders different companies’ accounts more comparable”. However, it noted that for trend variables (that is, variables comparing the present year’s accounts with those from three years earlier), the move to FRS102 could lead to the inclusion or exclusion of new items in the relevant accounting line which could in turn affect the scheme’s PPF score in a way that did not reflect an improved understanding of employer strength.

To address this, the PPF will introduce a mechanism by which schemes can notify Experian where they think the switch to FRS102 would cause an artificial change in their PPF score. The rules allow schemes to certify impacts from FRS102 where different years accounts are compared but have been calculated on different bases. Adjustments  can be requested, by using the accounting standard change certificate for an employer, guarantor or ultimate parent who is on a scorecard with a trend variable. Experian will be making available on its website a certificate, a “what if” tool and guidance.

The PPF strongly encourages schemes to test whether reporting an adjustment will have an impact on their mean score and levy band as the analysis it has carried out to date has indicated that most will not.

Schemes without a “substantive employer”

The PPF is also looking at the situation where a scheme has a sponsoring employer which does not have a “genuine business”, for example, a shell company or a special purpose vehicle (SPV). In such circumstances, the risk of a claim being made on the PPF cannot be measured accurately and therefore the PPF’s standard methodology would not be suitable for calculating the levy. The PPF acknowledges  that, as these kind of situations are rare, an immediate need to change  the levy rules is not clear. It intends to consult in 2017 on adding a rule to deal with schemes without a substantive sponsoring employer, should that be necessary.

The next triennium

The PPF has already begun work on developing its levy rules for the next three years (levy years 2018/19 – 2020/21). It intends to consult on those proposals in Spring 2017.

Key dates

Reporting requirement


Monthly Experian score

Last business day of each month from 30 April 2016 to 31 March 2017

Deadline for submission of data to Experian to impact on monthly Experian scores

One calendar month prior to the score measurement date (though accounts for new guarantors can be provided up to midnight on 31 March 2017)

Submit scheme returns on Exchange

31 March 2017 (midnight)

Contingent asset certificates to be submitted on Exchange and with hard copy documents as necessary to PPF         

31 March 2017 (midnight)

ABC Certificate to be sent to PPF

31 March 2017 (midnight)

Mortgage exclusion ("Officers") certificates and supporting evidence to be sent to Experian

31 March 2017 (midnight)

Accounting standard change certificates with supporting evidence to be sent to Experian

31 March 2017 (midnight)

Deficit-reduction contributions certificates to be submitted on Exchange

28 April 2017 (by 5pm)

Certification of full block transfers to be completed on Exchange or sent to PPF (in limited circumstances)

30 June 2017 (by 5pm)

Invoicing starts

Autumn 2017