Government Increases General Levy Rates Following Consultation Feedback

The Department for Work and Pensions (DWP) and HM Treasury have announced a decision to raise general levy rates on occupational and personal pension schemes after reviewing feedback from a recent consultation. The chosen option, increasing the levy by 6.5% across all categories, aligns with the majority of responses received.

The Occupational and Personal Pension Schemes (General Levy) (Amendment) Regulations 2024 have been presented to both Houses of Parliament following this decision. Initially, the government favored a 4% annual increase with an additional premium for small defined contribution schemes in 2026/27, but industry feedback led to the alternative choice.

Among the 287 consultation responses, the majority backed the 6.5% increase, expressing concerns about the previously proposed premium payment deadline. Only a few respondents favored the alternative options, emphasizing the challenges schemes would face in meeting financial obligations.

Tim Box, a principal at Lane Clark & Peacock, welcomed the government’s revised approach, highlighting the potential adverse impact of the previously preferred option. He commended the decision to balance contributions across all schemes, noting the industry-wide support for this direction.

The consultation process reflects a collaborative effort between stakeholders and policymakers to address the general levy deficit effectively. By incorporating feedback from various sources, the government aims to ensure sustainable financial management within the pensions sector.