25.03.2024
The Pension Protection Fund (PPF) has paid out £1 billion in member compensation over the past financial year, as reported in its 2020/21 Annual Report and Accounts published today.
The £1bn was paid to the 179,500 of the PPF’s 288,000 members who have already retired or are in receipt of survivor benefits.
Oliver Morley, PPF Chief Executive Officer, said: “Paying £1bn in compensation over the past financial year demonstrates the true impact of the protection we provide and the significant difference we make to our members’ lives.”
The PPF protects the financial futures belonging to just under 10 million people from more than 5,300 eligible UK defined benefit (DB) pension schemes, and will compensate them for their lost pensions if their employer fails and their scheme is unable to pay them what they promised.
Oliver Morley continued: “Our greatest risk remains the uncertainty around future claims following employer insolvency, especially in this challenging environment. Despite our strengthened funding position, we’re mindful that many of the schemes we protect have substantial deficits which could, if they were to claim, have a material impact on our reserves.”
While concerns around the pandemic’s impact on UK businesses remain, the PPF’s strong investment performance, coupled with rigorous risk management, saw its funding position increase by 13.9 per cent to 127.3 per cent, and its reserves increase to £9bn, having previously fallen to £5.1bn in 2019/20 as a result of the markets’ reactions to the COVID-19 crisis.
The PPF also reported its assets under management grew from £36bn to £38bn and its growth assets returned 17.6 per cent (£3.7bn), its largest return on this investment portfolio to date.
Lisa McCrory, PPF Chief Financial Officer and Chief Actuary, said: “Our priority remains to protect the financial futures belonging to our current and future members, and reduce the burden of future claims on our levy payers.
“Our exceptional investment performance over the past financial year has not only allowed us to improve our funding position and grow our reserves, but has put us in a very strong position to take on future claims that could materialise as a result of the pandemic.
“We hope our strengthened funding position will reassure our current and future members that we continue to be an essential lifeline for them, and we call on trustees of the schemes we protect to remind their members of the vital protection we provide so they know their pensions are protected if the worst were to happen.”
The PPF reported solid progress on its objectives as set out in its 2019-22 strategic plan and that it has continued to deliver consistently high levels of customer service to its members and levy payers.
In recognition of the pressures on levy payers impacted by COVID-19, the PPF offered a two-month interest-free payment extension on levy bills, which was agreed in all cases.
Additionally, in September 2021, the PPF extended their levy bill easement for another year and announced in its 2022/23 levy consultation it expected to collect £415m from its levy payers, a reduction of £105m from the £520m levy estimate in the previous levy year (2020/21).
Ends
Key links:
PPF website
PPF Media Centre
PPF Corporate Publications
For further press information contact:
PPF Press Office
020 8406 2107
[email protected]
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