The National Association of Pension Funds called for cap in the annual premium, or levy, paid by defined benefit corporate sponsors to the Pension Protection Fund, Britain’s equivalent to the PBGC.
The NAPF, an industry organization that represents about 1,200 British pension funds with more than £800 billion ($1.13 billion) in total assets under management, also believes the U.K. government should assume the cost of levies should they rise above any potential cap for corporate sponsors.
“The government should recognize that it is neither fair nor credible that the full cost of other companies’ pension promises should rest on a declining number of (defined benefit) pension schemes and their corporate sponsors,” according to a statement issued by the NAPF.
The announcement was made in response to a consultation paper issued in November 2008 outlining proposals to alter the way that the PPF levy is calculated. Other factors such as long-term insolvency risk and investment risk were considered. “The NAPF believes that investment risk should not be included until after 2014 or 2015 due to the current adverse investment climate,” according to the statement. “Adopting it earlier will place a double burden on schemes that are heavily exposed to equities.”
The PPF will now consider the feedback from the initial consultation paper and issue a response later this year. There is no specific time frame on the response, said PPF spokesman Paul Reynolds.
