Investment Risk and the Risk Based Levy - PPF Consultation

The Pension Protection Fund has today published its consultation document on whether to include investment strategy as a separate risk factor in the risk based levy.

www.pensionprotectionfund.org.uk/news-details.htm?id=5582

The document provides an analysis of the impact of introducing investment risk as a separate risk factor. Findings include:

• The majority of the schemes’ investment strategies are broadly similar. As a result, just over 3% of the levy would be reallocated as a result of taking investment risk into account as a separate risk factor
• The cost to pension schemes of introducing investment risk as a risk factor would be disproportionate to this reallocation.

The document sets out the Board’s initial view that it is unlikely to be appropriate to introduce an investment risk factor into the risk based levy at the current time, but that it will be important to continue to monitor key trends that affect the impact of investment risk on the risks individual pension schemes pose to the Pension Protection Fund.