'Fairer' pensions levy to raise £500m
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Your support makes all the difference.The Pension Protection Fund will this week ask UK business for more than £500m to help underwrite the scheme to save workers' retirement incomes.
However, it will soften the blow by announcing its intention to change some of its terms to deal with complaints by subsidiaries of foreign companies and media groups.
The PPF was set up earlier this year to create a safety net for company pension schemes. It is being paid for by a risk-based levy from more than 100,000 companies. The way this levy is being worked out has led to outrage, with companies such as Nestlé and Trinity Mirror leading protests against the calculations behind the PPF.
Lawrence Churchill, the scheme's chairman, will this Friday reveal details of how much the PPF is likely to need to fund itself. When it was created in the Pensions Act last year, the Department for Work and Pensions estimated that the PPF would require £300m in its first year. On Friday a figure of more than £500m is likely to emerge.
The PPF had said it would not allow parental guarantees for subsidiary companies to be taken into account when calculating the levy. This led to Nestlé UK facing a bill of £12m, rather than the £300,000 it expected. The PPF will this week soften that stance, saying that if parent companies give guarantees to the subsidiary's pension fund, the levy will be minimised.
Another issue was that intangible assets, such as the value of newspaper titles, were not allowed to be included. The PPF will now reverse its position.
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