Annual report shows PPF provides real security for pensioners

The Pension Protection Fund (PPF) has pledged to focus more than ever on reducing long term risks to further increase security for pension scheme members.

In its Annual Report, PPF Chairman, Lawrence Churchill, said: “We now have more complete data on the pensions universe which means we can begin to consider more sophisticated risk management measures, improving both scheme member security and value for money for our levy payers.

“We plan to remain a stable and resilient part of the financial institutional landscape for a long time to come, operating at all times in a simple, fair and proportionate manner.”

PPF Chief Executive, Partha Dasgupta, added: “2006 was a landmark year for the PPF, with over 7000 pension scheme members transferring into the Fund. After two years we are now 88 per cent funded, providing real long term security in retirement from an improving financial position.

“We are also acutely aware of recent research and debate over improvements in life expectancy. It is important for pension scheme members to have confidence in the strength of our financial position, and as a result we have decided to adopt more prudent longevity assumptions. If we had not done that, we would have been 92 per cent funded.”

Key challenges for the future identified in the report include:

the need to improve communications with scheme members and lay trustees and looking at ways of streamlining the assessment process which decides whether a scheme transfers to the PPF or not

exploring how the levy can better reflect long-term risk and how risk is distributed across the pensions universe, and

looking at using financial markets to bear risk on the PPF’s behalf, and how financial innovation may be used to mitigate liabilities arising from future claims on the PPF.