Pension Protection Fund

Co-operatives UK is aware that many mutual employers who pay into the Pension Protection Fund (PPF) are about to be hit with a massive and unfair hike in their costs. We are currently lobbying on behalf of six of the UK’s largest co-ops who expect to see their PPF ‘levy’ approximately double this summer for no good reason, with extra costs for these businesses exceeding £2 million this year alone. 

Here's a submission we sent to the House of Commons Work and Pensions Select Committee

What's the problem? 

Because Experian is unable to collect data from Companies House on recent charges on mutual societies’ assets, under new PPF rules these businesses are given a scheme average 'neutral' mortgage age score as part of their overall insolvency risk. In practice this move to a neutral scoring is ascribing a higher overall risk of insolvency on the live scorecard of some mutual societies, with their risk banding rising dramatically from 1 to 3, regardless of their actual financial position. As a result these societies are expecting their next PPF levy to double - representing more than £2 million in increased costs for just six co-operatives this coming year alone.   

We have had confirmation that this issue is also affecting a number of building societies. 

We would like to make a distinction between this particular grievance and those of businesses who see their PPF costs rise as a result of how risk is calculated and ascribed in the PPF universe, which we recognise changes over time. Instead, our grievance is that a sharp increase in costs is expected as a direct result of how data is being collected for the PPF calculations. The position of these employers has not become riskier by the PPF’s calculations, rather the data to make these calculations is not being collected.

It is unfair for prudent stable mutual societies to be downgraded in such a costly manner simply because they file the data Experian requires with the FCA Mutuals Team rather than with Companies House.

What are we doing?

Co-operatives UK is currently:

  • Lobbying the PPF for a work-around on mutual society mortgage age data 
  • Asking the FCA to improve mutual society data
  • Campaigning for an overhaul of co-op policy in government - see here

Support our collective action

If your co-op pays into the Pension Protection Fund we urge you to check whether Experian has started ascribing a higher insolvency risk score which you don’t agree with. If it has we would very much like to hear from you and ask that your co-op supports our collective action.

Please email our Policy Officer [email protected] with the following details:

  • Name of your co-op
  • Details of the forecast levy increase you’re facing
  • Confirmation your co-ops supports our collective action on your behalf