The Pension Protection Fund (PPF) has confirmed it will set a zero levy for 2026-27, marking the second consecutive year that conventional DB pension schemes will not be charged a PPF levy.
The change was made possible following the approval of the levy measures outlined in the Pension Schemes Bill, which removes legislative restrictions that had previously prevented the board from reducing or removing the levy. The PPF confirmed its intention to set a zero levy for conventional DB schemes in the 2026/27 PPF Levy consultation.
Meanwhile, the PPF has also confirmed it will maintain a proportionate Alternative Covenant Schemes (ACS) levy next year. It points to the evolving nature of the superfund framework and the growth of the sector as reasons for this decision. The PPF says it is committed to working closely with its stakeholders to review the ACS levy methodology for 2027/28.
It also said it will publish its policy statement and final rules for the 2026/27 levy next month.
PPF CEO Michelle Ostermann says: “This is an important time for pensions. Not charging a levy to conventional schemes in 2026/27 reflects the evolution of risk in this sector and will reduce costs for DB schemes and employers. We’re grateful to all those who responded to our recent consultation, and more broadly for the ongoing dialogue and productive engagement with our members and levy payers throughout our 20-year history.”
Society of Pension Professionals (SPP) DB Committee chair Jon Forsyth says: “The SPP has long recommended that the PPF be granted the flexibility to have a zero levy; has worked with PPF and DWP to help achieve this; and reiterated this support when we responded to the PPF consultation on the same last month. So, the announcement today is welcome news, especially for the 5,000 or so DB schemes that this covers.”
Pensions UK executive director of policy and advocacy Zoe Alexander says: “We fully support the PPF’s approach to reducing the levy it charges DB schemes and have been calling for a reduction to zero for several years.
“Prudent investment management and falling interest rates have combined to mean the vast majority of DB funds are now in a healthy surplus, posing a significantly reduced risk of having to rely on the PPF. The PPF is, in turn, unquestionably well-capitalised.
“With the end of the financial year approaching, and schemes in the process of carrying out financial planning for next year, this decision provides very welcome clarity on the costs schemes will face and eases some of the reporting burden they face.”
