The Pension Protection Fund’s funding position improves

The funding position of the Pension Protection Fund (PPF) has improved with last year’s £1.2 billion deficit replaced with a £400 million surplus.

The figures, which appear in the PPF’s 2009/10 annual report, show the surplus is mainly the result of financial markets performing better, solid investment returns and less costly claims.

Alan Rubenstein, chief executive of the PPF, said: “The significant improvement in our funding is clearly welcome and reinforces our view that the PPF, and the protection system of which we are part, is sound. But I would stress the PPF is not a short-term undertaking, which why this change must be seen in context of our aim to become financially self-sufficient by 2030.

“Delivering on our long-term funding strategy is essential. In the end, that is the way we will provide reassurance to the millions of people whose pensions we protect that we can meet our long-term obligations and that their compensation, now and in the future, is safe in our hands.”

The PPF also reported that by 31 March 2010, a total of 46,429 members had transferred to the PPF, with 20,872 already receiving compensation.

In addition, the total amount of PPF compensation paid out during 2009/10 was almost £82 million. The PPF earned a return of 15% on its invested assets during the year and received £1.2 billion from levy receipts and from transferring scheme assets.

By the end of 2009/10, PPF was responsible for supporting trustees of schemes in PPF assessment with assets of £7.6 billion and liabilities of £9.4 billion and 150 schemes had transferred to the PPF during 2009/10. A further 62 schemes had completed the assessment process by other means, such as rescue or buyout and 936 schemes had qualified for the Financial Assistance Scheme by the end of the year.

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