Changes to the administration fees of the pension protection fund are being proposed to prevent a £5m deficit, the department for work and pensions has confirmed.
A statement from the DWP said the government was proposing to charge some pension funds increased levies to help cover the cost of running the scheme.
The administration costs of the fund are recovered by a levy paid by those pension schemes eligible for protection.
It would mean these levies would go up by 15 per cent in 2015/16, 2016/17 and 2017/18.
In a statement on the proposals, the DWP said: “The PPF’s administrative costs should be viewed against a background where the body’s size, scope and the risks it is required to manage have been growing steadily.
“At the end of 2009/10 it had funds of £4.5bn under management; by the end of 2013/14, this figure had risen to £16.5bn.”
The fund was established in 2004 to protect the members of defined benefit occupational schemes by paying compensation when an employer has a qualifying insolvency event.
According to DWP estimates, there will be a £5.1m levy deficit by the end of 2014/15, and this will increase by another £5m every year if action is not taken.
The government is now consulting on what action should be taken – with its preferred approach to charge increased levy rates each year to eliminate the deficit by 2022.
This would mean the levy rate for each member in schemes with more than 10,000 members would be £1.45.
Adviser view
Nigel King, of Surrey-based Ward Williams Financial Services, said: “We do not really get involved in that kind of thing other than with clients who are trying to move away from their final salary scheme.
“That said, there has to be a very good reason to move away from a final salary scheme, and one reason could be because there is potential for the scheme to fall into the pension protection fund. It is down to individual circumstances.”