On the go: The Pension Protection Fund is proposing changes to its levy risk assessment model, which will result in increased charges for larger employers.
The decision, explained in a consultation launched on Thursday, is a result of to the move from Experian to Dun & Bradstreet, as the insolvency risk scores for the 2021-22 levy will be adjusted to match actual insolvency experience, the pensions lifeboat stated.
D&B built a version of the existing insolvency risk model being used by Experian, which produces the same outputs when the same data is introduced.
However, a range of tests that assess the performance of the model found that the scorecards used are over or under-predicting the level of insolvencies, mainly the one used for the largest employers.
The PPF is therefore proposing to adjust the scorecard variables, which is expected to result in increased levies for larger employers, with corresponding decreases for some smaller entities and not-for-profit ventures.
“We regard the case for recalibration as very strong, since otherwise smaller entities and not-for-profits would be subsidising the largest employers,” it stated.
According to the document, a third of schemes will see a similar amount of levy in 2021-22, with almost half of the schemes seeing a lower charge.
One in five schemes will see an increase, in particular those with employers on ‘scorecard 1’, which includes the largest companies, the PPF added.
The pensions lifeboat and D&B have also launched a new digital portal, allowing levy payers to view insolvency risk scores calculated by D&B. The website allows users to submit queries online and hold live web chat with customer service advisers.
The PPF is seeking feedback from stakeholders on the new services being introduced, including the portal, and on the proposed approach to the measurement of insolvency risk. The first levy invoices to be calculated with D&B will be issued in autumn 2021, based on scores from April 2020.
The lifeboat announced earlier this week that the levy for 2020-21 will increase to £620m, a £45m hike when compared with the amount expected to be collected for 2019-20.
