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Pension Protection Fund

Volume 477: debated on Friday 13 June 2008

To ask the Secretary of State for Work and Pensions how many pension schemes became ineligible for Pension Protection Fund levies in (a) 2006-07 and (b) 2007-08. (184211)

[holding answer 4 February 2008]: I apologise for the delay in replying; the information is not available in the form requested.

Section 126 of the Pensions Act 2004 and regulations made under it set out the eligibility criteria for pension protection fund levies; in broad terms, occupational pension schemes which are not money purchase schemes or otherwise exempted by legislation are eligible schemes as long as they had not begun to wind up when the PPF opened for business in April 2005.

In the 2007 update of the Purple Book—defined benefit pensions universe risk profile—published on 18 December 2007, the Pension Protection Fund (PPF) estimates that its eligible defined-benefit (DB) universe was around 7,800 schemes.

Pension schemes may become ineligible for Pension Protection Fund (PPF) levies for a number of reasons. For example, a scheme would become ineligible if its trustees entered into a compromise with the sponsoring employer to reduce the debt the employer owed the scheme, without the Board of the PPF's agreement. A scheme could also become ineligible if it only had two members and one of those died—as schemes with fewer than two members are not eligible schemes. A scheme would also cease to be an eligible scheme if it completed winding up.

The Board of the PPF only holds data on the eligible scheme universe; if a scheme is ineligible it will be recorded only with the pensions regulator. Provision of the correct information by schemes is of course essential, and the two organisations work closely together to ensure consistent data. However, if a scheme is invoiced for the pension protection levy and later demonstrates that it was ineligible, the Board will refund any sums paid.

Between 1 April 2007 and 31 March 2008 a total of 9,084 schemes notified the pensions regulator that the scheme had completed wind-up. Of these, 675 were defined benefit schemes and 139 were hybrid schemes, and the balance (8,270) were defined contribution schemes. 814 of these schemes (the DB and hybrid ones) would until that point have been eligible for PPF levies, providing they had not begun winding up before the PPF opened for business in April 2005.

Similar information for 2006-07 could not be provided without disproportionate cost. However, improvements in the way scheme data are collected will mean that similar information for 2007-08 and beyond will be available.