The proposal is to set up a mechanism for stakeholders to notify Experian, the PPF’s insolvency risk services partner, where the move to FRS 102 Financial Reporting Standard, would otherwise cause an artificial movement in the rating.

The PPF reiterates its position on schemes that have no substantive sponsoring employer, including the need for a new approach for calculating risk-based levies where such schemes do exist.

David Taylor, general counsel of the PPF, said: ‘2017/18 marks the final year of the current triennium – the period over which we aim to keep rules stable. We have delivered on that commitment to stability, while addressing issues raised by stakeholders – particularly the potential impact of moving to new accounting standards.’

The consultation states: ‘Our overall conclusions are that the vast majority of schemes will not see a change in levy band due to the change in standard, but a small number will see a change in levy band (in some cases an improvement, in others a deterioration – and some variables provide examples of employers moving in both directions).

‘For the small proportion of schemes seeing a change our detailed analysis showed a significant range of variables are affected.’

However, the PPF says stakeholders have raised concerns about the one-off effects on trend variables, which compare information from the latest accounts with that from an earlier year. Specifically raised were variables affected by the requirement for employers sponsoring multi-employer schemes to reflect the pension deficit in their accounts.

The consultation states: ‘We propose to allow certification for entities on the large and complex and not-for-profit scorecards (the only scorecards with trend variables affected by this issue).

‘The certification will be in relation only to data that is used in a trend variable, and where for the comparison year the accounts were drawn up on a different basis (so that data based on FRS 102 accounts is being compared to data from an earlier year not on that basis).

‘The effect will be to remove the impact of the one-off change.’

Julia Dickson, PwC pensions credit advisory partner, welcomed the introduction of transitional relief on first-time FRS 102 adoption for defined benefit scheme employers that are classified by the PPF as ‘not-for-profit or large and complex.’

‘These employers need to understand the quantification of FRS 102 adjustments to their accounts. The PPF's portal will help users to identify any negative impact on their PPF levy for data collected by Experian from the end of April 2016 to the end of March 2017. 　　

‘If these accounting changes cause a drop in levy band, then these employers may submit certifications outlining these adjustments ahead of the 31 March 2017 deadline. Doing so could avoid employers in this category from being potentially unfairly penalised with a weaker levy band,’ she said.

However, Chris Jackson, PwC accounting advisory leader, warned that some companies, who may still be in the process of preparing their accounts under FRS 102 for the first time, will also need to consider further changes.

‘Whilst the PPF's transitional relief addresses FRS 102 adoption for the first time, for International Financial Reporting Standard (IFRS) and FRS 101 reporters there are further fundamental changes coming down the line, with new revenues and lease accounting standards which will need to be considered in the future,’ he said.　　

The consultation states that the PPF expects to collect a levy of £615m in 2017/18.

Taylor said: ‘This is unchanged from last year’s estimate, reflecting the long-term approach we take.’

After the levy consultation closes, the PPF will finalise the rules and publish the levy determination in December. It will also consult on the new levy triennium around the end of the year.

The consultation closes on 31 October.

The PPF 2017/18 Pension Protection Levy Consultation Document is here