Industry organisations have broadly welcomed the news that the government is considering making legislative changes to give the Pension Protection Fund (PPF) more flexibility to reduce its levy, highlighting this as a "great stride in the right direction".

The PPF previously postponed its decision regarding the 2025/26 levy to allow more time for legislative changes, as it faced growing pressure from the industry to reduce its levy even in the absence of, or as a precursor to, legislative change.

The government has since confirmed that it is considering giving the PPF greater flexibility to reduce the levy it collects from pension schemes by relaxing restrictions, prompting the PPF to cut its levy estimate for 2025/26 by more than half, to £45m.

Society of Pension Professionals (SPP) defined benefit (DB) Committee chair, Chris Ramsey, said that while "we are not quite there yet, today’s announcements from the PPF and DWP represent great strides in the right direction".

“As we have often said, if a legislative change can be secured in the 2025 Pensions Bill, this would mean pension schemes would no longer have to bear an unnecessary multi-million pound annual cost, and this money could instead be used to help members, employers and the wider economy," he stated.

Adding to this, Pensions and Lifetime Savings Association (PLSA) director of policy and advocacy, Zoe Alexander, described the cut in the levy for 2025/26 as "really good news" for DB pension funds and their sponsors.

“The strong signal of intent from the government to change the rules to allow the PPF more flexibility to reduce the levy further suggests a solution could be included in the upcoming Pension Schemes Bill," she said.

Broadstone chief actuary, David Hamilton, also highlighted this as "fantastic news", encouraging the government to "move swiftly" to give the PPF flexibility over their levy so that it can be reduced all the way to zero.

This was echoed by Brightwell CEO, Morten Nilsson, who said: “Today’s announcements are a step in the right direction and will be welcomed by the industry.

“The existing regime is unreasonable and untenable. Reform of the PPF levy is imperative to reflect the improved funding of DB schemes and the substantial surplus within the PPF.

“I hope that the DWP acts with urgency to introduce legislation so that the PPF can calculate a zero levy."

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