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Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539
Rapid Response Team: 0800 559 3500
Switchboard: +44 (0)203 947 1539

DWP Plans To Change Fraud Compensation Levy

Author: Nicola Sharp  16 November 2021

The Department for Work and Pensions (DWP) is considering changes to the fraud compensation levy because of increased pension scam claims.

The DWP has drawn up plans that would lead to pension schemes paying more than double the current fee that they pay. In the consultation it has published, the DWP proposes increasing the levy that finances the Fraud Compensation Fund (FCF). The proposal would see the current 75p per member charge for pension schemes rise to £1.80, with the current levy for master trusts increasing from 30p to 65p.

The FCF was set up under the Pensions Act 2004 and is run by the Board of the Pension Protection Fund (PPF). It pays compensation to occupational pension schemes that have lost money due to dishonesty.

In April 2021, the FCF levy was raised to the maximum allowed by law of 75p per member and 30p for master trust members. But in its annual report, the PPF stated that this levy “would not be sufficient to fund all potential claims, should they crystallise’’. It added that it had been working with the DWP “to resolve the funding gap’’ by securing a loan from the DWP for the FCF. The proposed levy increase would help ensure this loan was repaid by 2030-31.

It is clear that the amount of claims already having been made on the fund have compelled the DWP to seek to raise the levy in anticipation of further claims in the future. The DWP sees a need to take such action to ensure the FCF has sufficient funds to meet such claims. While the consultation process is still ongoing, it is hoped that decisions will be made in order for the proposed changes to be introduced in 2022.

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Nicola Sharp


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Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.

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