Joint Committee on Statutory Instruments Thirtieth Report


Memorandum by the Department of Social Security



1.  The Committee has requested a Memorandum on the following point:

    Regulation 2(9) substitutes a new Schedule to the 1997 Levy Regulations containing rules for the calculation of general levy (Parts I and II) and the maximum amount of compensation levy (Part III). Indicate the resulting increases in the rates (both amounts and percentages) since the Schedule was last revised and explain why no such indication was given in or with the instrument, as required by paragraph 2.77 of the Statutory Instrument Practice.

2.  The increases in the amount of the general levy, and in the maximum amount per member of the compensation levy, provided for in the new Schedule set out in the Schedule to the Regulations are as follows:

Provision of Amount of Percentage
Schedule increase increase
Part I
(a) £ 1.25 14.3
(b) £ 0.05 4.8
(c)(i) £ 0.05 6.7
(c)(ii) £ 5.00 4.8
(d)(i) £ 0.05 8.3
(d)(ii) £ 50.00 6.7
(e)(i) £ 0.05 11.1
(e)(ii) £250.00 8.3
(f)(i) £ 0.05 16.7
(f)(ii) £500.00 11.1
Part II
(a) £ 0.15 4.16
(b) £ 0.05 16.7
(c)(i) £ 0.04 19
(c)(ii) £ 5.00 16.7
(d)(i) £ 0.03 17.6
(d)(ii) £ 30.00 19
(e)(i) £ 0.03 25
(e)(ii) £150.00 17.6
(f)(i) £ 0.02 25
(f)(ii) £300.00 25
Part III [no increase]

3. The Department regrets that no indication of the size of these increases was given in or with the Regulations, and will ensure that, when the Regulations are published in the Annual Volume, a passage giving such an indication will be included in the Explanatory Note.

April 1998

Extract from Department's letter of 20 April 1998

Overall, the objective in setting the general levy for 1998-99 has been with a view to recovering £11,061,000, being total anticipated expenditure of £11,777,000 in that year in connection with the Registrar of Occupational and Personal Pension Schemes, the Pensions Ombudsman, the Occupational Pensions Advisory Service and the Occupational Pensions Regulatory Authority, less surplus of £716,000 from 1997-98.

When distributing the increase in the general levy necessary to meet that amount among occupational and personal pension schemes of varying sizes, attention was paid to two further factors in particular: first a request by the pensions industry to make the system of calculation and collection as simple as possible by using amounts which are multiples of 5p; and second to reflect the anticipated differences in relative expenditure, from the resources of the organisations funded from the general levy, as between schemes of different sizes.

The combination of these considerations has, as you pointed out, led to increases of 25% in some cases (two of them being instances where the amount per member has been increased to the next higher multiple of 5p). I am however assured that, overall, the new rates have been designed to recover a total of about £11,061,000 by way of total general levy.

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Prepared 11 May 1998