£45 million saved for pension schemes thanks to Government reforms
Source: gov.uk (2025-09-22)

The Pension Protection Fund has today (23rd September) confirmed that it will not charge a levy to pension providers, saving £45 million across 5,000 Defined Benefit (DB) pension schemes.

Pension Protection Fund (PPF) will not charge a levy this year unlocking £45 million of savings for 5000 pension schemes

The savings can be used to boost the economy through investments or top up pension pots

This was made possible by the Government’s Pension Schemes Bill which is removing barriers to growth as part of our Plan for Change

Growth is at the heart of the Government’s Plan for Change and these significant savings could now be used for investments to boost the UK economy, or to strengthen the security of members benefits.

This decision is a direct result of the reforms set out in the Government’s Pension Schemes Bill, demonstrating how our plans to modernise the pension system are already delivering for the public and the UK economy.

Minister for Pensions, Torsten Bell said:

Rigid rules currently leave pensions schemes paying millions into the Pension Protection Fund even when extra funding is not required.

The Pension Schemes Bill will sweep away those constraints. This will support better funded pension schemes and greater investment by firms.

The PPF levy is a charge on eligible pension schemes that pays into a central reserve – which currently sits at £14 billion – used to protect employees’ pensions if their employer collapses. Regulations currently operate a use it or lose it mechanism, limiting increases to 25% and preventing a zero levy from being invested if it were ever needed.

The Pension Schemes Bill, which has received wide-ranging support, rewrites the rules around the levy making it easier for the PPF to adjust it year on year and without risking losing the power to charge if it drops to zero. This allows for greater flexibility freeing up money in times of high surpluses while ensuring that it can be altered if needed to protect the future of schemes and safeguard pensioners.

Kate Jones, PPF Chair said:

I’m pleased that we’re able to save DB schemes £45 million this year. The legislative changes we’ve needed to further reduce the levy have made good progress, giving us the confidence to act decisively for this year’s levy.

As we reach this significant milestone on our journey to financial self-sufficiency, we recognise the invaluable contribution levy payers have made over the past 20 years. We couldn’t have delivered the protection and peace of mind to members without them.

This new approach to setting the levy to zero demonstrates the Government’s dedication to ensuring the sustainability of the pension system while reducing the financial burden on employers and pension schemes. The move comes as a result of the fund’s robust financial position allowing them to balance the interests of levy payers and its members.

Alongside this, the Pension Schemes Bill will boost workers’ pension pots by £29,000 through hoovering up small pension pots worth £1,000 into one place, protecting savers from underperforming schemes and creating Defined Contribution megafunds so bigger and better pension schemes can drive down costs and invest in a wider range of assets.

Further information

The Board of Pension Protection Fund collects a levy from eligible defined benefit occupational pension schemes.

The Pension Protection Fund has a reserve of more than £14 billion. In view of its strong financial position, the Pension Protection Fund announced that they would more than halve the 2024/25 levy to £45 million for the financial year 2025/26. They have now confirmed that the levy will be reduced to zero, without risking its ability to pay its members’ benefits.

Restrictions in the legislation prevent the levy from being significantly reduced even to zero and raised back up again within a reasonable timeframe. It was announced in the Pension Schemes Bill that the Government intends to remove this restriction and enable the Pension Protection Fund to reduce the levy to zero or a low amount.