The Department for Work and Pensions has launched a consultation
on proposals to change the structure of the levy – the annual
charge paid by pension schemes - and raise rates for the next
three years, from April 2021 onwards.
The levy helps fund three arm’s-length bodies sponsored by the
DWP: The Pensions Regulator; The Pensions Ombudsman; and The
Money and Pensions Service. It also funds part of the development
costs for the pensions dashboard.
The levy rates were last increased in 2008/09, and were reduced
by 13% in 2012/13. However, the levy deficit is expected to reach
approximately £80 million by March 2021.
In considering its options, the government has sought to balance
the need to adequately fund the pensions bodies, while also
limiting its impact on the pensions schemes that fund it.
Minister for Pensions said:
Changes within the pensions industry and regulatory landscape
have resulted in growing responsibilities for the DWP’s
pensions bodies, putting additional pressure on their
expenditure.
Whilst the government has protected the industry from increases
in the levy over a number of years, we can no longer avoid the
fact that action is needed to bring levy rates back into
balance with expenditure.
The levy is payable by the trustees of registrable occupational
and personal pension schemes. The amount levied on individual
schemes is calculated based on the number of scheme members.
