Britain’s pension lifeboat is slashing the premiums paid by defined benefit schemes to insure their members’ retirements.
The £30 billion ($40.1 billion) Pension Protection Fund, which protects retirees in the event that their pension plan becomes insolvent, is reducing the amount that plan sponsors must pay in by 10 percent for the 2018-2019 fiscal year. The PPF will charge a levy of £550 million, down from £615 million for 2017-2018, it confirmed in a policy statement Tuesday.
General counsel David Taylor said responses to the PPF’s September consultation document helped the fund develop its approach to assessing the risk of plan sponsor insolvencies.
“We take a long-term view of risk and set the levy rules accordingly,” he wrote in the statement. “There is much that schemes and their sponsoring employers can still do to influence the levies they pay... In particular, the new simplified arrangements for certifying deficit reducing payments provide an easier route to ensure schemes pay a levy that reflects their most up to date funding position.”
Between January and July of this year, 22 pension schemes transferred into the PPF as a result of employers no longer being able to fund their pension obligations, according to the PPF website. These included Olympic Airlines’ SA Pension and Life Assurance Scheme, the Work Foundation Pension Scheme, and the SIS Chemicals Pension and Assurance Scheme.
The levy announcement comes as the PPF unveils its new chief executive to replace Alan Rubenstein, who confirmed his intention to leave the role in July, after eight years leading the fund.
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Rubenstein will be replaced by Oliver Morley, the former chief executive of the U.K.’s Drivers and Vehicles Licensing Agency.
In a statement, Julian Mund, chief executive of the Pensions and Lifetime Savings Association, said Rubenstein had made a “huge contribution” to the pension industry during his tenure.
“We would like to thank Alan Rubenstein for the huge contribution that he has made to the pension’s world with his careful stewardship of this essential safeguard,” he said. “As chief executive of the Pension Protection Fund since April 2009, he has worked hard to build confidence in the industries lifeboat and helped to ensure that individuals are protected should the worst happen and their scheme fail.”
Mund added that the PLSA looked forward to “working closely with Oliver Morley and his team in the future as we focus on safeguarding the retirement savings of millions of people.”
According to its 2017 annual report, the Pension Protection Fund added 12,000 members to the PPF in the 12 months through March, bringing the total to 235,000.