The Department for Work and Pensions has increased the statutory cap on how much the Pension Protection Fund can raise from defined benefit schemes next year. The 2026 Levy Ceiling Order sets the maximum at £1,473,343,665.61 for the financial year starting 1 April 2026, reflecting a 5% rise in average earnings over the 12 months to 31 July 2025. The instrument was made on 30 January 2026 and laid before Parliament on 2 February, signed by Pensions Minister Torsten Bell. Under section 178 of the Pensions Act 2004, the levy ceiling must track earnings growth. (gov.uk)
This is a backstop, not a bill. Section 177 of the 2004 Act requires the PPF to set its levies below the ceiling and to structure them so that, where levies are charged, at least 80% of the take is risk‑based. In short, the Order raises headroom; it does not dictate what schemes will actually pay. (legislation.gov.uk)
For context, last year’s cap was £1,403,184,443.44. The new ceiling is roughly £70.16m higher-a 5% uplift consistent with the earnings review methodology prescribed in statute. The 2025 Order set the previous figure and explains the annual uprating mechanism. (legislation.gov.uk)
In practice, the PPF charged no conventional levy in 2025/26, citing strong reserves and improved scheme funding. The PPF has also consulted on maintaining a zero levy for conventional schemes in 2026/27, noting it must publish its final determination before 31 March 2026. Until that decision lands, the increased ceiling merely defines the maximum the PPF could raise if conditions turned. (ppf.co.uk)
The policy hinge is legislative. Government proposals remove the year‑on‑year 25% ratchet that previously made it impossible to cut the levy to nil and reintroduce it quickly if needed. DWP flagged this change in January 2025; the PPF’s own materials describe why the flexibility matters for setting very low-or zero-levies without boxing itself in. For finance directors, this means today’s relief can reverse swiftly if claims spike. (gov.uk)
Why insolvency practitioners care is straightforward. When a sponsoring employer of a DB scheme suffers a qualifying insolvency event, the PPF steps into the trustees’ shoes as creditor for section 75 debts during the assessment period. That gives the PPF voting power and standing across processes where the scheme has a claim. The levy ceiling defines the outer limit of what the PPF could seek from the wider DB universe if losses mount. (legislation.gov.uk)
Those creditor rights now extend into modern restructuring tools. Guidance confirms the PPF can exercise creditor rights in company moratoriums and Part 26A restructuring plans-consulting trustees but controlling any formal vote tied to the scheme debt. For plan proponents, that means viability evidence and covenant terms must withstand scrutiny from a well‑resourced statutory creditor. (shoosmiths.com)
The claims environment remains elevated. The Insolvency Service reports 23,938 registered company insolvencies in 2025-similar to 2024 and still high by historical standards. Most cases are smaller CVLs, but compulsory liquidations also rose to their highest annual number since 2012. A benign funding backdrop has masked this for DB schemes; a downturn or a large sponsor failure would quickly change the risk picture. (gov.uk)
The PPF says it holds c.£14bn of reserves and expects to rely primarily on investment returns rather than levy income in the near term. That supports the current zero‑levy stance, but the combination of a higher ceiling and new legislative flexibility means the PPF can re‑price risk rapidly if required. IPs and restructuring lawyers should assume the PPF will keep exercising creditor muscle in distressed deals while preserving the option to call on the wider DB universe if losses escalate. (ppf.co.uk)
A jurisdictional note: this Order covers England, Wales and Scotland. Northern Ireland traditionally mirrors the GB ceiling through a separate statutory rule-last year’s NI order set the same 2025/26 cap-so advisers on cross‑border groups should watch for a matching instrument from the Department for Communities in Belfast. (legislation.gov.uk)