The Pension Protection Fund (PPF) has confirmed it will charge no levy for 2025/26, saving 5,000 UK defined benefit (DB) schemes and their sponsoring employers £45m.
The change follows the Pension Schemes Bill, which gives the PPF more flexibility over how it sets levies. The new measures allow it to reduce the levy to zero while preserving its ability to reinstate in future if required.
The Bill has now passed the Commons Committee stage with broad support from policymakers and industry stakeholders. The PPF Board says its decision was taken early to provide clarity for schemes and sponsors, helping them plan financial decisions for the year ahead.
PPF says “in a robust financial position”, which allows it to take this decision and maintains “strong confidence in its ability to pay current and future members’ benefits.”. It says it will continue engaging with policymakers as the Bill progresses and will consult on its approach for 2026/27 once the legislation is finalised.
Minister for Pensions, Torsten Bell says: “Rigid rules currently leave pension schemes paying millions into the Pensions Protection Fund even when extra funding is not required. The Pension Schemes Bill will sweep away those constraints. This will support better funded pension schemes and greater investment by firms.”
PPF chair Kate Jones says: “I’m pleased that we’re able to save DB schemes £45m this year. The legislative changes we’ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year’s levy. As we reach this significant milestone on our journey to financial self-sufficiency, we recognise the invaluable contribution levy payers have made over the past 20 years. We couldn’t have delivered the protection and peace of mind to members without them.”
PPF CEO Michelle Ostermann says: “The PPF plays an invaluable role backstopping the entire DB pension system. It’s testament to the PPF’s maturity that we’re now in a position to be self-funding. By moving to zero levy, I’m delighted that we’re directly supporting the government’s pension reforms, delivering savings for schemes and enabling more growth supporting investment.”
Barnett Waddingham partner Lewys Curteis says: “We welcome the confirmation that the Pension Protection Fund (PPF) levy will be set to zero for 2025/26. Given the PPF’s strong funding position this is very much a case of “common sense prevails”, but there has been a lot of hard work behind the scenes and the PPF has demonstrated both flexibility and pragmatism to get to this position. The £45m earmarked for this year’s levy can now be put to better use to support schemes, companies and the wider economy.”