PPF levy – paying for past mistakes

Any schemes which have previously incorrectly identified themselves as being Last Man Standing may be re-invoiced by the PPF in respect of the PPF levy.

In December 2014, the Pension Protection Fund (PPF) announced changes to the way PPF levies would be calculated depending on how a scheme was classified. All schemes to be classified as Last Man Standing (LMS) were required to confirm to the PPF by 29 May 2015 that their Trustees had obtained legal advice in relation to their scheme structure.

The 2016/17 Levy Policy Statement issued in December 2015 confirmed that the PPF will be starting an exercise in re-invoicing schemes who  now appear to have incorrectly identified themselves as LMS in previous levy years.

What is a Last Man Standing Scheme?

A LMS scheme is a multi-employer scheme which is:

  1. Not a centralised scheme; and
  2. Does not have a discretion or requirement to segregate assets when a participating employer leaves.

What is the impact on the PPF levy?

LMS schemes receive a levy reduction as their PPF claims do not arise until the last employer becomes insolvent. Now that all schemes have, or should have, confirmed their status to the PPF as supported by legal advice, the PPF has visibility on schemes that may have incorrectly identified themselves as LMS and benefitted from a reduction in the levy when they should not have.

What are the relevant Levy Rules?

The test in the levy rules for 08/09 and 09/10 was that the scheme was only LMS if there was no power in the trust deed and rules to create a segregated part on the cessation of participation of an employer.

The test from 10/11 to 13/14 was that the scheme was only LMS if there was no trustee power in the trust deed and rules to create a segregated part on the cessation of participation of an employer.  The PPF have confirmed that they will not re-invoice schemes which identified as LMS in these years on the basis that  the Principal Employer held the power to segregate.

What action must Trustees take?

Any schemes which the PPF thinks, in light of the legal advice that has been submitted to them and the LMS status declared for 2015/16, has incorrectly identified as LMS can expect to receive a communication from the PPF, if they have not already done so.

Trustees will need to consider whether they did actually meet the definition in any previous years as set out in the levy rules for that year, and provide a response to the PPF.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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Colin Greig


I have extensive experience of providing clear, practical advice to employers, trustees of pension arrangements, institutions and individuals on a wide range of pensions issues.

Tim Green

Partner - Head of Pensions

I am a Partner in the Pensions team with a broad advisory, transactional and dispute resolution practice.