“(1) The Pensions Act 2004 is amended as follows.

(2) In section 116 (grants), leave out from ‘expenses’ to end of section.

(3) Omit section 117 (administration levy).

(4) In section 173(3) (Pension Protection Fund), before subsection (3)(a) insert—

‘(aa) any sums required to meet expenses incurred by the Board in connection with the operation or discontinuance of the Pension Protection Fund,’

(5) In section 188(3) (Fraud Compensation Fund), before subsection (3)(a) insert—

‘(aa) sums required to meet expenses incurred by the Board in connection with the operation or discontinuance of the Fraud Compensation Fund,’.” —(John Milne.)

This new clause abolishes the administration levy and provides for the expenses of the PPF and the FCF to be met out of their general funds. It would enable FCF expenses to be covered by the FCF levy.

Brought up, and read the First time.

I beg to move, That the Clause be read a second time.

This new clause would abolish the administration levy, which allows the Pension Protection Fund and Fraud Compensation Fund to meet their expenses from their respective general funds. PPF administration costs could instead be recovered from the wider protection fund, while FCF administration costs could be met from the FCF fund, funded through the FCF levy. The levy has in any case been suspended from 2023 to 2025. Many in the industry expected that this would lead to full abolition, especially given the clear recommendation from the DWP review in 2022.

The Society of Pension Professionals, which originally composed this Amendment, remains a strong supporter, and its view is widely shared across the pension sector. Discussions with the PPF indicate that it has no objection to this proposal and would be content for its administration costs to be met from general reserves. Given industry support and PPF agreement, we feel that the Government should implement this change without any further delay.

The levy raises only a relatively small amount, but it adds unnecessary complexity and confusion to scheme finances and risks undermining broader reforms, especially efforts to reduce the risk-based levy to zero, which have been widely welcomed.

Overall, this amendment provides the Government with the necessary powers to eliminate an outdated levy, which would streamline pension scheme funding. It is a small but meaningful reform that aligns with wider pension reforms that are all aimed at reducing red tape, simplifying funding and ensuring efficient use of scheme resources.

I am grateful to the hon. Member for the new Clause. I acknowledge the concerns surrounding the abolition of the Pension Protection Fund admin levy. This is not a new issue; it has obviously been raised significantly by parts of the industry. I broadly support the intent of the new clause. It provides for the expenses of the PPF board and the Fraud Compensation Fund to be met by the PPF levy and the Fraud Compensation Fund levy, instead of the PPF administrative levy. The Amendment to section 116 of the Pensions Act 2004 is unworkable as it is currently drafted, but more importantly, I give the hon. Member our assurance that we intend to lay amendments at a later stage that will achieve the same aim. On that basis, I hope that the hon. Member will withdraw the new clause.

I thank the Minister for his reply. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.