The Pension Protection Fund (PPF) has increased the 2021/22 fraud compensation levy on pension schemes to 75 pence per member, the maximum level allowed under current regulations.
As reported by our sister title, Pensions Age, compensation levy rates for master trusts are lower than that of traditional schemes, at 30 pence per member.
The pensions lifeboat that there was “no other option” to increasing the levy, following the November court ruling that clarified that occupational pension schemes set up as part of a scam were eligible to claim on the Fraud Compensation Fund (FCF).
Although the PPF said that the ruling was “excellent news” for victims of these scams, it has now received fraud compensation claims totalling over £40m and expects to receive more claims from schemes that are eligible.
The PPF’s 2019/20 Annual Report and Accounts showed that the FCF had assets of £21.5m.
With the claims already nearly double the value of the FCF’s total assets, the PPF said it needed to increase the levy to raise the additional funding required.
“We understand the impact this will have on schemes, but there’s no other option if we’re to be able to pay FCF compensation to schemes whose members are victims of occupational pension scheme fraud,” the PPF stated.
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