Update on PPF’s plans to re-invoice pension schemes mistakenly benefiting from last man standing discounts

Written on 22 Feb 2016

Back in October 2015 we reported on the Pension Protection Fund’s plans to re-invoice pension schemes which mistakenly claimed the last man standing (LMS) discount on their PPF levy in previous years, resulting in underpayment of the levy. Please see our previous update here

The PPF has provided more information on its plans in the Policy Statement on the PPF Levy 2016/17 (see section 3.5 on page 24). The PPF accepts that re-invoicing will be unwelcome, but confirms it will be carried out in a measured and considerate fashion, recognising that schemes will have certified in good faith. 

We have set out in the table below how the PPF’s plans will affect trustees of schemes which have previously held themselves out as being a LMS scheme:

You notified the PPF that your scheme had received legal advice confirming that it was not a LMS scheme before 29 May 2015 You will be receiving a letter from the PPF giving you 28 days from the date of the letter to either:

  • provide evidence that the scheme met the LMS definition in any of the levy years between 2008/09 and 2014/15; or
  • confirm that the scheme did not meet the LMS definition in any of those previous levy years. 

The PPF will consider any evidence provided to it, before confirming the amount that will be re-invoiced to the scheme for the levy periods 2008/09 to 2014/15.

You have received legal advice that your scheme is not a LMS scheme, but you have not yet notified the PPF You should confirm in this year’s scheme return that your scheme is not a LMS scheme. The PPF will then write to you in the same terms as set out in the box above.
You have not yet obtained legal advice confirming whether your scheme is a LMS scheme for PPF levy purposes You should obtain the relevant legal advice, before you complete this year’s scheme return.

Schemes which are in an assessment period or have become ineligible for entry into the PPF will not be re-invoiced. Additionally, the PPF has a discretion to decide not to re-invoice a scheme, where the sums involved are limited. If this discretion is exercised in relation to your scheme, the PPF will contact you directly. 

We understand that the PPF will consider whether to apply interest to the amount to be re-invoiced on a case by case basis, aiming to balance the fact that the re-invoiced amount is an additional cost in a single year against the need to ensure that the correct levies are paid.