The Pension Protection Fund (PPF) has confirmed that the levy on conventional defined benefit (DB) schemes under its protection will remain at zero for 2026/27.

This is the second year in a row that conventional schemes, which are DB schemes with a substantive sponsoring employer, will not be charged a PPF levy.

In its 2026/27 PPF Levy consultation, the PPF outlined its intention to set a zero levy for conventional DB schemes that are dependent on the progress of levy measures in the Pension Schemes Bill.

The PPF Board said it was reassured by the consideration given to the changes needed to conclude its decision making, with the government having introduced amendments to the bill that will abolish the administration levy and enable the PPF to cover its operating costs from the core PPF fund.

The pensions lifeboat also confirmed that it will maintain a ‘proportionate’ alternative covenant schemes (ACS) levy in 2026/27.

It will continue to apply an ACS levy in 2026/27, and said it was committed to working closely with stakeholders to review the ACS levy methodology for 2027/28 to ensure it remains proportionate to the risks posed.

The PPF added that it will publish its policy statement and final rules for the 2026/27 levy next month (March 2026).

“This is an important time for pensions,” commented PPF CEO, Michelle Ostermann.

“Not charging a levy to conventional schemes in 2026/27 reflects the evolution of risk in this sector and will reduce costs for DB schemes and employers.

“We’re grateful to all those who responded to our recent consultation, and more broadly for the ongoing dialogue and productive engagement with our members and levy payers throughout our 20-year history.”

Society of Pension Professionals DB Committee chair, Jon Forsyth, added: “The SPP has long recommended that the PPF be granted the flexibility to have a zero levy; has worked with PPF and DWP to help achieve this; and reiterated this support when we responded to the PPF consultation on the same last month.

“So, the announcement today is welcome news, especially for the 5,000 or so DB schemes that this covers.”

Pensions UK executive director of policy and advocacy, Zoe Alexander, said the association fully supported the PPF’s approach to reducing the levy it charges DB schemes.

“Prudent investment management and falling interest rates have combined to mean the vast majority of DB funds are now in a healthy surplus, posing a significantly reduced risk of having to rely on the PPF," she continued.

"The PPF is, in turn, unquestionably well-capitalised. With the end of the financial year approaching, and schemes in the process of carrying out financial planning for next year, this decision provides very welcome clarity on the costs schemes will face and eases some of the reporting burden they face.”

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