Issued on: 24 June 2008
The Pensions Trust is bitterly disappointed by the recent announcement from the Pensions Protection Fund (PPF) indicating that levies for the two social housing sector pension schemes it operates, the Social Housing Pension Scheme (SHPS) and the Scottish Federation of Housing Associations (SFHA) Pension Scheme, are set to increase by approximately £450,000 this year. This is in spite of the long-awaited recognition by the PPF and its supporting agencies that trust-based, charitable and voluntary organisations carry a lower risk of insolvency than those of commercial organisations.
The increase to the risk-based levy comes about as the PPF seeks to recoup more money from pension schemes, after failing to plan its requirements adequately.
The Pensions Trust had calculated the levies for SHPS and the SFHA Pension Scheme for 2008/09 based on its estimates for 2007/08 and using the PPF’s new ‘scaling factor’. The PPF uses the scaling factor to bring its total levy up to the required amount. We now know that the actual scaling factor for 2008/09 is 3.77, over twice the figure of 1.6 originally indicated by the PPF just a few months back in November 2007.
Commenting on the situation, Logan Anderson, Head of Customer Relations at The Pensions Trust said; “We accept that the provisional figure carried a caveat, but we are dismayed that the PPF could get this so wrong. We have engaged with the PPF, Dun & Bradstreet, the Housing Corporation, Communities Scotland and our participating employers to try to ensure that our clients are treated more fairly. We now just have to hope that those efforts will to some extent mitigate the impact of this unforeseen increase in the levy scaling factor.
The additional risk-based levy for our social housing schemes will amount to some £450,000. For these schemes in particular, the PPF levy is, to all intents and purposes, a charitable donation; the chances of 165 (SFHA Pension Scheme) and 700 (SHPS) separate organisations all becoming insolvent in the same year is practically nil. This makes the announcement all the more galling.
"We wonder when the levy is going to stabilise so we can make sensible provision for it in our schemes’ funding plans. The current situation is simply unacceptable.”
The Pension Protection Fund (PPF) was set up in 2005 to compensate members whose employer becomes insolvent leaving behind an underfunded pension scheme. The PPF is funded partly by levies – similar to insurance premiums – paid by schemes eligible to claim on it.
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