PPF calm in face of record GBP 155 bn deficit for DB pension schemes

The Pension Protection Fund (PPF) is keeping calm in the face of a record £155bn total funding deficit for defined benefit pension schemes it covers.
Concerns have been raised that the PPF could be put under a significant strain as companies go bankrupt during the downturn.
However, a spokeswoman for the PPF, which was set up to guarantee the retirement benefits of members of defined benefit pension schemes, said it was designed to cope with the impact of an economic downturn.
Figures released earlier this week by the PPF, show a £30bn increase in the total deficit of DB schemes, from £122.1bn at the end of October to £155 billion in November.The total deficit is now three times bigger than it was at the end of November 2007 when it stood at £58.3billion.
The PPF said that 6,690 pension schemes had a deficit at the end of last month, compared with 6,468 in October.
The aggregate funding position, which is the total assets minus total liabilities, is also estimated to have worsened to a deficit of £136.0 billion at end-November 2008 from a deficit of £97.3bn at the end of October 2008.
The PPF†spokeswoman said: “The PPF is designed to work in a benign environment and in a downturn. The majority of the cases that end up at the PPF will involve small and medium size companies where the financial consequences to us will not be significant.
“It is also important to remember that the PPF is like a pension scheme and it only pays out compensation when it falls due. Liquidity is not a problem for the PPF either, we currently hold £2bn in assets and we are paying out £3.2 million a month in compensation.”