Corporate insolvency risk incorporated into PPF levy

Published on May 30, 2014 by Crawfords Accounting

Corporate insolvency risk has been factored into new calculations of the levies payable by businesses towards the Pension Protection Fund.

According to the Confederation of British Industry, the risk-based element of the PPF previously did not include corporate insolvency risk in as fair a way.

Now businesses may find their PPF levies change – some may go up, and others may go down – and those already at risk of business insolvency may find it difficult to adapt to higher levies as the changes are introduced.

Jim Bligh, head of pensions at the CBI, says: “Businesses see the PPF as an essential lifeboat to ensure people don’t lose their pensions if their employer goes under, but want to make sure the levy remains proportionate.

“The way the risk-based element of the levy has been calculated hasn’t always fairly reflected insolvency risk, so we welcome the new approach.”

He adds that there will be “winners and losers” under the new system, but that businesses should be given time to adjust to the new levies.

But any increase is still likely to be a cause for concern for companies on the edge of business insolvency, and prompt insolvency advice should be a priority where this is the case.

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