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Law360, London (March 31, 2020, 4:34 PM BST ) Pensions schemes will not have to face a planned 10% hike on their general levies due to the financial stress caused by the COVID-19 crisis, the U.K. government has said.
The government said Friday that it will hold off on the planned 10% increase on the General Levy on Occupational and Personal Pension schemes, which was scheduled to take effect on April 1.
Minister for Pensions and Financial Inclusion Guy Opperman said the government wants to support businesses through the coronavirus pandemic, which has now infected more than 700,000 people worldwide.
"I understand the uncertainty businesses and employers are facing right now and that's why we've withdrawn the pension schemes levy increase," Opperman said.
The government has revoked regulations that would have automatically hiked the general levy on April 1. It said it will now focus on conducting a wider review of the levy scheme and will assess whether further hikes will be required in 2021.
The general levy is used to fund the Department for Work Pensions, The Pensions Regulator, The Pensions Ombudsman, and the Money and Pensions Service.
The government announced an increase to the fee following a consultation in autumn 2019.
The increase resulted from a finding that the fund posted a cumulative deficit of more than £16 million in 2019. This was projected to increase to more than £50 million by 2020.
The Pensions and Lifetime Savings Association said it is pleased with the government's decision to hold off on the fee hike.
"We are very pleased that the government has decided to not go ahead with a 10% increase in the levy in light of the hugely challenging economic situation," said Nigel Peaple, director of policy and research at the PLSA.
"As we said in our response to Government on this issue last autumn, it is much better to do a review of the levy structure before introducing any increases," Peaple added.
The government said it is important to make sure the levy is adequate to fund regulators, particularly in a "growing pensions market led by the successful introduction of automatic enrolment."
The government has been beefing up pensions regulation since 2017, when it updated the 2017 Pensions Schemes Act to impose tough new safeguards on pensions schemes.
--Additional reporting by Najiyya Budaly. Editing by Rebecca Flanagan.
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