The Occupational and Personal Pension Schemes (General Levy) Regulations review 2023

The consultation raises awareness of the ongoing deficit in levy funding and sets out options for mitigating this over the next three tax years from 2024 to 2025 through to 2026 to 2027. It seeks the industry’s views on the three options previously agreed by ministers.

Option 1 Continue with the current levy rates and levy structure

This option would freeze rates at this year’s rates until tax year 2026 to 2027 and retain the four categories of rate payer:

• defined benefit (DB) schemes
• defined contribution (DC) schemes other than master trusts
• master trusts
• personal pensions schemes

This would see the levy deficit continue to grow, requiring greater rises at a later date.

Option 2 Retain the current levy structure and increase rates by 6.5% per year

This option allows for the current structure of the levy to be retained while increasing rates for all schemes at 6.5% per year.

This option will bring the cumulative deficit back into a compliant level by 2031.

Option 3 Increase rates by 4% per year and signal an additional premium rate for small schemes (with memberships up to 10,000) from 2026

This option increases rates by 4% per year across all schemes and will add a premium to schemes which as of April 2026 have memberships under 10,000.

This premium allows for a lower initial increase across all schemes, while still paying off the deficit, and supporting the consolidation of smaller schemes.