PPF reports £678m surplus, an increase of £248m from previous year
Funding update also published - PPF still on track to meet target
Reports investment returns of 4.7 per cent, equivalent to £214 million
A total of almost 75,000 people have now transferred into the PPF
Figures released by the Pension Protection Fund (PPF) reveal that at the end of March 2011 it had a £678 million surplus over liabilities, an increase of £248 million from the previous year.
In its annual report published today (Monday), the PPF also reported that, at the end of the same period, it was 105.1 per cent funded compared with 103.3 per cent last year.
These figures mean that the probability of the PPF achieving financial self-sufficiency by its target date of 2030 increased from 83 per cent at 31 March 2010 to 87 per cent at 31 March 2011.
PPF Chairman, Lady Barbara Judge, said: “We have seen excellent progress during what has been a difficult year economically. While our results are encouraging in the short-term, they must also be seen in the context of our long-term objective to become financially self-sufficient by 2030 – and they confirm that we remain on track to achieve that objective.
“While we may have ridden the storm well so far, we cannot afford to be complacent and we remain vigilant to any risks to our future funding. I believe this gives the people who receive our compensation continued confidence in our ability to pay that compensation for as long as they need it.”
More details about the PPF’s long-term funding position can be found in the PPF Funding Strategy Update which has been published today alongside the annual report.
Chief Executive, Alan Rubenstein, said: “The period since the end of March 2011 has seen difficult times in the financial markets and this has affected our funding, although we have fared better than other pension schemes because of the nature of our investment strategy.
“This highlights the importance of continually reviewing our funding strategy. The update we have published today is the first formal review we have carried out since we launched the strategy in 2010 and reflects new factors which may affect its chances of success.
“After thorough analysis, we report that, despite these new factors and the challenging economic environment, our ultimate target remains the same. We believe this will give all our stakeholders the confidence that we can meet our long-term funding aims.”
Notes to editors:
1. Annual Report and Accounts 2010/11
Top 10 Facts and figures
• By 31 March 2011, we were £678 million in surplus, an increase of £248 million from the previous year
• By 31 March 2011, a total of 283 schemes had transferred to the PPF, representing 74,651 people
• 335 schemes were in the assessment period, representing 187,223 members who were protected to PPF levels of compensation
• During the year, 170 schemes completed PPF assessment, beating the 2010/11 target of 135
• Our investment assets grew from £4.4 billion in 2009/10 to almost £6.3 billion in 2010/11
• During the year, we spent £31.3 million running the organisation against a budget of £34.6 million
• Our customer service team handled more than 8,000 calls and more than 3,000 pieces of correspondence
• We saw investment returns of 4.7 per cent (equivalent to £224 million), beating our LIBOR benchmark of 0.7 per cent
• We were named in the One to Watch category of the Best Companies to Work for in the public sector list
• During 2010/11, we transferred 287 FAS schemes, beating our target of 250.
2. At the end of March 2010, the value of PPF assets exceeded its liabilities by £400 million. This figure is based on the actuarial value of PPF liabilities, including a provision for schemes in the PPF assessment period.
4. The update is the first formal review we have carried out since we launched the strategy and it takes into account two developments, in particular, which have influenced our thinking when carrying out this review. They are:
• the new pension protection levy framework due to take effect in 2012/13, and
• the switch from using the Retail Prices Index (RPI) to using the Consumer Prices Index (CPI) to measure the indexation of our compensation.
In adjusting our risk modelling to reflect these changes, we have carried out a thorough analysis of the implications for the PPF and concluded that, while we have taken into account new factors, our ultimate targets remain the same.
5. The Pension Protection Fund was set up under the provisions of the Pensions Act 2004 in April 2005 and is classified as a public financial corporation. It has been established to pay compensation to members of eligible defined benefit and hybrid pension schemes when there has been a qualifying insolvency event in relation to the employer, and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.
For further press information contact: Richard Hunt on 020 8633 5931/0789 425 5561 or Ana Moreno on 020 8633 4932/ 07961 957 480