The Pension Protection Fund (PPF) has today published its 2021/22 Annual Report and Accounts, highlighting its achievements against its 2019-22 strategic priorities and improved financial resilience.
In 2019 the PPF set out five strategic priorities which were critical for the achievement of its mission and to help mitigate future challenges. It has now achieved these priorities and is in a position of strength for the future so it can continue to support its 438,998 PPF and Financial Assistance Scheme (FAS) members.
Oliver Morley, PPF Chief Executive Officer said: “This year, we’ve paid out £1.1 billion in member payments, more than last year. This underpins once again the importance of our role in providing assurance, not only to our existing members, but also the promise of protection we offer to the 9.7 million members in the DB schemes we protect.
"Going forward, our priority remains to provide protection and reassurance, while also continuing to innovate and respond to the changing economic and social climate that impacts our levy payers and members.”
The PPF also reported its exceptional investment performance over the past financial year had played a key role in strengthening its financial position, increasing its funding ratio to 137.9% and its reserves to £11.7 bn. A key highlight was the fund’s continued focus on sustainable investment which allowed it to grow its global forestry portfolio by 20 per cent to hit £1bn in the past year.
Against the backdrop of its strengthening financial position, the PPF will now complete its review of its long-term funding strategy. The review, which will be published in the coming months, has been considering afresh the risks the fund faces and how its approach to funding will need to evolve.
As the review enters its final stages, an emerging conclusion is that the PPF will need to redefine its funding objective to focus on maintaining financial resilience. The fund is now considering the role levy will play in maintaining financial resilience and will consider changes as part of the consultation on the 23/24 levy in September.
Oliver Morley continued: “Over the years, the levy has been a vital source of income, without which we wouldn’t have been able to provide compensation to our members. Our expectation has long been that the importance of our levy would decline over time as our funding position improved. As we enter a new phase in our funding journey, we can now consider bringing down the levy without risking our ability to pay members’ their benefits.
“We will also re-think our levy system and ensure its fit for the future. We’re grateful for the feedback we’ve had on this to date, and we’ll be looking to engage further with those stakeholders over the coming months.”
The PPF will publish the outcome of the PPF’s Long-Term Funding Strategy Review this autumn, as well as announce how much it intends to charge in levy next year and consult on the levy rules for 2023-24.
For further information, please read:
- the PPF Annual Report and Accounts 2021/22
- a more detailed update on the funding strategy approach and future of levy.