The Pension Protection Fund (PPF) has said the “time is right” to review several key areas of its governing legislation, recognising that stakeholders want to see progress on the legislation governing its levy and the levels of indexation it pays.

In its strategy for the next three years (2025-28), the PPF acknowledged that legislative change is ultimately down to the government but affirmed its intent to proactively help identify the right approach in the best interests of members and levy payers.

The PPF said that if legislation is changed it will seek to implement those changes as “quickly and effectively” as possible.

In particular, the PPF said it will work with government to create a framework that allowed for a zero levy but also supports financial security by enabling the levy to be reintroduced in the unlikely event it becomes necessary.

This builds on the news earlier this year that government was considering giving the PPF greater flexibility to reduce the levy it collects from pension schemes by relaxing restrictions, which enabled the lifeboat to cut its levy estimate for 2025/26 to £45m.

The PPF also said it will consider the necessary changes to the industry-funded PPF administration levy, which is in line with the recommendation for its abolition, acknowledging that the PPF is now in a position to be self-funded.

Commenting on this, PPF chief executive officer, Michelle Ostermann, said: “We are acutely aware of the financial pressures many of our members and levy payers may face, and we hear their calls for changes to the compensation we pay and the levy we charge.

“These matters require legislative action, and we will continue to work closely with government, ensuring that decisions reflect the best interests of members and levy payers.

“We are ready to act swiftly to implement any resulting changes from this engagement with our government partners.”

The strategy confirmed that the PPF will work with the government to enable PPF and Financial Assistance Scheme compensation data to be available to its members on pensions dashboards “as soon as possible”.

In addition to this, it will work with the government to progress a review of the indexation of compensation as recommended by the Work and Pensions Select Committee (WPC) in March 2024, particularly recognising the need to consider changes to pre-1997 indexation levels.

The government has faced repeated calls to provide an update on this work, although Pensions Minister, Torsten Bell, wrote to the WPC this week (31 March) to confirm that the government would share an update on this as part of its response to the committee's broader DB pensions report, which is set to be shared "in the coming weeks".

The PPF's strategy also outlined the lifeboat's plans to finalise all known applications to the Fraud Compensation Fund (FCF) and work with the Department for Work and Pensions and The Pensions Regulator (TPR) to review and establish whether any future claims on the FCF are likely.

In terms of shaping the pensions industry itself, the PPF said it will consider how its skills, capabilities, and resources could be leveraged to support the outcomes of members and levy payers.

The PPF also outlined plans to enhance the speed of decision-making for PPF+ cases by collaborating with partners and aim to work with industry stakeholders to improve the data concerning UK defined benefit (DB) schemes.

Following the recommendations in TPR's 2023 review, the PPF will also work with TPR and DWP to investigate the best way to “manage DB pension schemes unlikely to make it to buyout, in a way that maximises the benefit to savers”.

In addition to this, the PPF confirmed it would further develop how it operates by undertaking a programme of work to benchmark its key functions to relevant peers, evolving its funding framework and overall strategy, leveraging technology, and reviewing its ‘core’ systems.

The PFF said it will ensure its systems, processes, relationships, and data are also fit for a post-levy environment.

The strategy also outlined how the PPF intend to deliver on its 2025–28 diversity, equity and inclusion strategy, understand the carbon footprint of its operations and what it can do to reach the goal of net zero in operations by 2035, and establish a view on climate change transition requirements, reflecting changing expectations and best practice.

PPF chair, Kate Jones, explained that with pensions policy back in the “spotlight”, it is an apt time to reflect on the “success story” that is the PPF.

She acknowledged that the environment today is “fundamentally different” from 20 years ago and the PPF stands today as a financially and operationally mature organisation looking to the future with confidence.

“We will continue to work with our partners in government and industry so we can deliver the best possible outcomes for our members, levy payers, and the wider pensions industry, in our next phase,” she added.

Adding to this, Ostermann commented: “We look forward to the next phase of our journey and to continuing to work with our government and industry partners to make a meaningful contribution in the UK pensions landscape.”

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