DWP consults on changes to general levy’s structure and rates
The Department for Work and Pensions has published a consultation on the general levy.
The DWP is seeking views on its proposed changes to the structure and rates of the levy. It is seeking the industry’s input on three options:
Option One
Freeze rates at this year’s rates until the 2026-27 tax year and retain the existing four categories of rate payer: defined benefit schemes; defined contribution schemes other than master trusts; master trusts; and personal pension schemes.
There is currently a deficit in the general levy, so this option would mean the deficit would continue to grow. Greater rises in the levy would be needed at a later date.
Option Two
The consultation reads: “Retain the current levy structure and increase rates by 6.5% per year … This option would bring the deficit back into a compliant level by 2031.”
Option Three
Increase rates by four percent and add a premium rate for small schemes (with under 10,000 members) from 2026.
The consultation reads: “This premium allows for a lower initial increase across all schemes, while still paying off the deficit, and supporting the consolidation of smaller schemes.”
About the levy
The levy exists to cover the cost of running the Pensions Regulator, the Pensions Ombudsman Service and the Money and Pensions Service. Almost all UK occupational and group personal pension schemes pay the levy, and the levy is calculated based on the number of scheme members.
The consultation closes on the 13 November 2023.
