The Occupational Pension Schemes (Levies) Regulations 2005

Explanatory Note

(This note is not part of the Regulations)

These Regulations impose the administration levy, the initial levy and the PPF Ombudsman levy provided for in sections 117, 174 and 209 respectively of the Pensions Act 2004.

Regulation 1 provides for citation, commencement and extent.

Regulation 2 provides for interpretation.

Regulations 3 to 7 make provision for the imposition and payment of the administration levy and the PPF Ombudsman levy. They also make general provision as to how the amount of those levies is to be determined and the times at which they are to be paid. Regulation 4 provides that no PPF Ombudsman levy is payable for the financial year ending with 31st March 2006. Regulation 6 specifies the rate at which the administration levy is payable for that financial year.

Regulations 8 to 11 make provision for the imposition and payment of the initial levy. They also make provision as to how the amount of the levy is to be determined and the time at which it is to be paid.

Regulation 12 provides that, while generally schemes that are only eligible schemes for part of the levy period are only liable for a proportionate part of the levy, there is no reduction in the initial levy if the scheme ceases to be eligible during the initial period.

Regulation 13 introduces Part 4 of the Regulations which makes general provision applying to the administration levy, the PPF Ombudsman levy and the initial levy.

Regulation 14 makes provision for the apportionment of levy payments between the levies where it is not apparent which levies a payment relates to, and enables apportionment to apply also where payments may relate to any pension protection levy or fraud compensation levy.

Regulation 15 makes provision for the application of the regulations in the case of multi-employer schemes.

Regulation 16 makes provision for the application of the regulations in the case of schemes with partial guarantees from public authorities.

Regulation 17 makes provision for the application of the regulations in the case of hybrid schemes.

Regulation 18 makes provision to avoid duplication of payments where the levies are payable under corresponding provisions which have effect in Northern Ireland.

As these Regulations are made before the expiry of the period of six months beginning with the coming into force of the provisions of the 2004 Act by virtue of which they are made, the requirement for the Secretary of State to consult such persons as he considers appropriate does not apply.

An assessment of the impact on business, charities or the voluntary sector of the provisions in these Regulations for the administration levy, the initial levy and the pension protection levy was included in the Regulatory Impact Assessment that accompanied the Pensions Act 2004. A copy of that assessment has been placed in the libraries of both Houses of Parliament. Copies may be obtained from the Department for Work and Pensions, Regulatory Impact Unit, level 3, Adelphi, 1-11 John Adam Street, London WC2N 6HT.

It is expected that the provisions in these regulations for the PPF Ombudsman levy will have only a negligible cost impact on business, charities or the voluntary sector in future years if a levy is raised. Publication of a full Regulatory Impact Assessment is not necessary for such legislation.