The Pension Protection Fund (PPF) has confirmed that it will not charge a conventional PPF levy this year (2025/26), as a result of the Pension Schemes Bill's recent parliamentary progress.

The move is expected to benefit around 5,000 defined benefit (DB) schemes in the UK, saving them and their sponsoring employers a collective £45m. 

The PPF previously announced that it had included a provision when setting this year’s levy rules, enabling it to recalculate the conventional levy to zero if appropriate legislative changes were brought forward, and sufficiently progressed, this year. 

It also put the 2025/26 levy invoicing on hold, in order to leave the door open for the PPF to move to a zero levy for conventional schemes for 2025/26.
 
The Pension Schemes Bill has since been introduced with measures designed to give the PPF greater flexibility to set the levy, enabling the lifeboat to move to zero levy whilst preserving its ability to reinstate the levy in future if it were ever needed.
 
Given that the bill recently passed through the committee stage in the House of Commons, the PPF's Board said that it had decided to exercise its provision to move to zero levy for 2025/26 in recognition of the bill's parliamentary progress and the broad support among policymakers and stakeholders.

This decision, according to the PPF, is intended to provide timely clarity for DB schemes and their sponsors, enabling them to better make any associated financial decisions this year. 
 
It was also highlighted as an "important milestone" in the PPF’s own funding journey, as the lifeboat emphasised that it is in a robust financial position, which has enabled it to take this decision whilst maintaining strong confidence in its ability to pay current and future members’ benefits. 

Indeed, PPF CEO, Michelle Ostermann, highlighted the fact that the PPF is now in a position to be self-funding as a "testament to the PPF’s maturity". 

"By moving to zero levy, I’m delighted that we’re directly supporting the government’s pension reforms, delivering savings for schemes and enabling more growth supporting investment," she continued. 

The government also held up the decision as a demonstration of its "dedication" to ensuring the sustainability of the pension system while reducing the financial burden on employers and pension schemes.

Pensions Minister, Torsten Bell said: “Rigid rules currently leave pension schemes paying millions into the PPF even when extra funding is not required.

"The Pension Schemes Bill will sweep away those constraints. This will support better-funded pension schemes and greater investment by firms.”
 
Adding to this, PPF chair, Kate Jones, said: "I’m pleased that we’re able to save DB schemes £45m this year. The legislative changes we’ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year’s levy. 

"As we reach this significant milestone on our journey to financial self-sufficiency, we recognise the invaluable contribution levy payers have made over the past 20 years. We couldn’t have delivered the protection and peace of mind to members without them.” 
 
The news was also welcomed by the broader pensions industry, as Pensions UK executive director of policy and advocacy, Zoe Alexander, said: “The PPF is unquestionably well-managed and well-funded.

"Meanwhile the defined benefit sector the PPF exists to protect has moved from a deficit to a significant aggregate surplus in recent years while claims on the PPF have been very low. 

"The reduction of the levy to zero is positive news for defined benefit pension funds, their members and their sponsors, and is the culmination of collaborative working and constructive conversations between Pensions UK, its members and the PPF. 

"We acknowledge DWP's contribution for bringing the necessary legislation forward and welcome the timing of this decision, which will provide much-needed certainty for schemes.”
 
Adding to this, Brightwell CEO, Morten Nilsson, hailed the news as a "landmark moment which will deliver meaningful savings for DB schemes and their sponsors, while maintaining the important safety net the PPF provides to the industry".
 
The news has also been welcomed by businesses, as SME Pension Consultation Group and member of the PPF SME Levy Forum, Charles Malcolm-Brown, said that SME sponsors are "mightily relieved" by the PPF Board’s decision, while Confederation of British Industry future of work and skills director, Matthew Percival, said that the PPF's decision not to charge a levy this year is "welcome news for businesses". 

The PPF said that it will continue to support policymakers as they consider the bill in its remaining parliamentary stages, and will engage in due course with industry on its levy plans for 2026/27, which will be informed by the remaining passage of the bill.

Further levy changes could also be seen in the future, as Bell also recently confirmed the government's intent to abolish the PPF's administration levy, with plans to include this as part of the next round of amendments to the Pension Schemes Bill.

However, broader issues impacting the PPF are still a key debate as the bill continues through parliament, with a particular focus on pre-1997 indexation issues.

The PPF said that it continues to prioritise supporting the government’s consideration of PPF indexation levels, confirming that this work is unaffected by the move to a zero levy.  

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