The PPF,established in April to provide a safety net for the members of underfunded final-salary pension schemes, announced in December that its 2006-07 levy would total about £575m. All companies with final-salary schemes must contribute to the levy. Those with high deficits and deemed to be at a higher risk of insolvency must contribute more.
But the CBI said yesterday the Government's move to implement a ceiling of £200m more than this year's predicted levy, was an indication that much higher cash-calls are expected over the next few years.
Although the PPF levy ceiling can be raised further, the process requires Parliamentary approval. The CBI said the Government had given the fund too much leeway for the immediate future.
John Cridland, the deputy director-general of the CBI, said: "If the PPF has to make full use of the leeway this ceiling allows, the cost will be well over double the original £300m [first-year estimate] given by the Government. "The Government must take action to make the PPF affordable. It must now agree to act as guarantor of the scheme in the event of an unexpectedly large company failure," he said. "And it must also bear the cost of the levy cap, so that financially stable companies are no longer expected to cross-subsidise weaker ones."
Paul Reynolds, of the PPF, said although the levy estimate for 2006-07 was £575m, the PPF hoped the action being taken by a number of schemes to address their pension problems would ensure the actual figure was lower.Reuse content