New consultation proposes increases to the general levy
17 December 2020
A new consultation, that was launched on 16 December 2020, proposes that the general levy should increase by 120% by 2024 for Defined Benefit (DB) schemes, but that master trusts will be granted a different rate.
The general levy is paid by all registered occupational and personal pension schemes, and recovers the funding provided by the Department for Work and Pensions (DWP) in relation to the core activities of The Pensions Regulator (TPR), the activities of The Pensions Ombudsman (TPO) and a portion of the activities of the Money and Pensions Service (MaPS).
A variety of factors has resulted in a gap widening in the DWP’s finances, including a 12-year freeze on levy rates, reductions in 2012 and for larger schemes in 2017. In addition to this, the funded bodies have had wider responsibilities placed on them, which has meant increased cost.
The consultation is seeking views on the Government’s proposed options for change to the structure and rates of the General Levy from April 2021, 2022 and 2023, and is directed at occupational pension scheme trustees, sponsoring employers of pension schemes and personal pension providers, in particular, but comments from the general public are also welcome.
The Government’s favoured approach would be to calculate levy payments differently for DB, Defined Contribution (DC), master trusts and personal pension schemes, but the levy would still be based on how many members are in a scheme. Different rates would be applied in relation to the level of resource required to regulate and support various sectors.
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