Member

Some of the underlying factors for giving this overall flexibility is that risks are decreasing over time as closed schemes mature and a smaller minority of schemes are underfunded. In time, when the levy might be needed again, the industry could look back and consider that closed schemes that had moved to significant maturity over the non-levy period had perhaps enjoyed a levy holiday that, in retrospect, was unfair. Removing the 80% risk-based restriction would allow the PPF to levy those schemes in an equitable way, should circumstances point to that. Without such flexibility, a future PPF levy would fall disproportionately on the remaining open defined benefit schemes, including those with strong covenants. This is largely because open schemes will generally have more risk-bearing, return-seeking assets, and bearing most of the levy is likely to deter from investment in UK productive assets.