UK Pension Protection Fund Could Hike Levies to Cover Deficit

November 8, 2006 ( - The UK Pension Protection Fund (PPF) may increase the amount companies pay to insure their plans in an effort to ease the £343 million ($650.6 million) shortfall it reported, according to Reuters.

Like the US Pension Benefit Guaranty Corporation (PBGC), the 19-month old agency pays the pension benefits of plan participants when companies become insolvent.

“With little evidence that the risk of schemes claiming on the PPF has reduced and a deficit in the first couple of years in operation, there will be pressure for levies to be cranked up,” said Tim Keogh, Worldwide Partner at consultants Mercer, according to Reuters.

The PPF had expected to need to raise £575 million ($1.09 billion) in the 2006-07 fiscal year, but, so far expects to require £324 million ($614.5 million) in levies from company pension schemes because estimates were cut as new company data on their pensions emerged.

The PPF has taken over the pension schemes of 98 firms during its first year of operation (See  Britain’s Answer to PBGC Opens for Business), according to Reuters.The agency reported in July that it would take on its biggest scheme ever – the 40,000 person pension plan of car manufacturer T&N at an estimated cost of £150 million (See UK Pension Protection Fund To Absorb £150M T&N Pension Shortfall ).