Pension Protection Fund, London, is seeking feedback on how to extend its levy rules to commercial consolidators for defined benefit funds, which are similar to DC master trusts.
The lifeboat for pension funds of insolvent U.K. companies outlined Thursday its levy estimate for fiscal year 2019-20. It plans to collect £500 million ($653.3 million) from U.K. DB funds whose participants would be eligible for compensation from the PPF should insolvency strike.
The £30 billion fund's estimate for the previous fiscal year was £550 million.
The PPF said it saw the highest level of claims in PPF history last year, with more expected in the near future, according to a news release accompanying its consultation.
Under the commercial consolidator model, a private company sets up a new DB fund that takes on the responsibility for the liabilities of other DB funds, in exchange for a one-time payment or structured payments by the previous sponsoring employer to the consolidator, or master trust, according to the U.K. government's March white paper, "Protecting Defined Benefit Pension Schemes."
The PPF has proposed basing levy charges for commercial consolidators on the existing methodology it uses to calculate charges for pension funds that do not have a substantive sponsor, "with adjustments to reflect the specific risks posed by commercial consolidators. The PPF expects its approach to evolve in coming years as the new regulatory framework for commercial consolidators is defined."
The PPF is also exploring how it can better support pension funds when it comes to planning levy payments.
The levy consultation runs until Oct. 25. The PPF seeks to finalize and publish its rules in December.