Schemes or the sponsoring employers of those schemes that can prove they’re genuinely struggling to meet the levy payment within the 28-day timeframe can ask for a payment plan.
Under current legislation all pension schemes have to pay the levy within 28 days, with an interest charge for late payment, which is currently 5 per cent above the Bank of England base rate.
However we understand that this may not be possible for some schemes. Our payment plan policy allows reduced interest charges to apply if a payment plan application is authorised.
What you need to do
You can only apply for a payment plan after you receive your invoice.
When applying for a payment plan, please:
- Complete an online application form within 28 days of receiving the invoice. We may not be able to accept if it’s received any later than this
- Explain why the full levy can’t be paid within 28 days without causing hardship or material detriment to the scheme or employer
- Upload supporting evidence and specify the quickest reasonable timeframe over which you’re able to pay your levy
Who can request a payment plan?
Scheme trustees or authorised scheme managers have to submit the form for scheme applications, while Finance Directors or other appropriate officers must submit the form for employer applications.
If you’ve received a revised invoice for a higher amount for a previous levy year, you can also apply for a payment plan.
If you’ve any questions or want to discuss your application, please email our Credit and Collections Team at [email protected]
What evidence you need to provide
We’ll consider a range of evidence if you’re able to give us a clear explanation of why it’s relevant.
Evidence for schemes
Relevant evidence might include:
- Proof that there are insufficient liquid funds in the scheme. For example, a breakdown of scheme assets plus notice terms.
- Reasons why the timely provision of liquid funds hasn’t been possible. For example, unexpected calls on cash.
Evidence for employers
- Evidence that the employer is obliged to pay the levy. For example, with a requirement to do so in the schedule of contributions.
- A cash flow forecast for the employer, reconciled to bank accounts/comparative information from previous years. You must include a clear explanation of why the forecast shows a payment plan is necessary.
How we assess applications
We review all applications and supporting evidence on a case by case basis, in line with relevant legislation and the policy set out on this web page.
If the Board considers that it’s appropriate to offer a payment plan, having taken into consideration any exceptional circumstances that may exist in relation to that scheme, the application will be approved.
Please note: we may not accept late applications. If you’re late applying, you’ll need to explain why your request has been delayed.
Complete an application form
Further information on payment plans
Are payment plans limited to certain size schemes
Although we do not apply a strict criterion that payment plans would only be open to schemes sponsored by SMEs, the combination of our policy intentions that i) the delay doesn’t have a material impact on our overall levy collection, and ii) that otherwise paying the levy in full would cause significant hardship to the scheme / sponsor, will mean that payment plans are more likely to be granted to smaller employers.
We have devised this policy with the expectation that in most cases larger employers should be able to access ways to pay the levy promptly.
What are expected standard terms of a payment plan
Typically, zero interest will be accrued in the first month, the following two months at a reduced rate of 3% with the standard rate of 5% applied thereafter. These rates are above the Bank of England base rate.
What happens if you miss a payment
If you miss a payment, you may have to pay the full amount of accrued interest at the rate of five per cent above the Bank of England base rate.
What happens to your employer’s credit score
Your employer’s credit score won’t be affected, because liability for the levy payment is with the pension scheme trustees.
Appeals, reviews and waivers
Applying for a payment plan won’t affect any appeal or review of your levy, unless it’s a waiver application.
If you have any questions or need help and support with payment plan applications please email our Credit and Collections Team at [email protected]