Pension Protection Fund reports £1.8bn surplus

The Pension Protection Fund (PPF) has reported a surplus of £1.8 billion in its 2012/13 annual report.

It also stated the probability of meeting its long-term funding target by 2030 has increased to 87%, an increased from 84% at 31 March 2012.

According to the PPF report, its performance owed much to a total return of 11.1% on its invested assets which, including levy income and assets from transferring defined benefit pension schemes, grew from £11.1 billion in 2011/12 to £14.9 billion in 2012/13.

The report also showed:

  • At the end of 2013, there were 223 pension schemes in the PPF assessment period, with assets of £5 billion and liabilities of £6.5 billion.
  • It took assets totalling almost £2.15 billion from schemes that completed assessment and transferred to the PPF during the year.

Barbara Judge, chairperson at the PPF, said: “We remain firmly on our glide path to financial self-sufficiency in 2030.

“During 2012/13, we recorded another year of rapid growth, both in the numbers of members benefiting from our protection and the amount of assets we now have under management.

“Our focus during the year was to reassure our members by managing our growth effectively, meeting the continuing challenge of turbulent markets and dealing with claims totaling more than £1 billion, a record for the PPF.

“The risks we face as an organisation remain high. As well as a record year for claims, we saw pension scheme funding worsen during 2012/13 and, although long bond yields have recovered a little since then, scheme funding remains at low levels.

“However, despite notable claims since March 2013, we remain financially strong and the probability of meeting our 2030 target remains broadly the same.”

James Walsh, European Union and international policy lead at the National Association of Pension Funds (NAPF), added: “Although the PPF is now more confident of hitting its long-term targets, the average levy paid by individual pension schemes is set to increase in the short-term, and this remains a concern.

“The NAPF remains committed to working with the PPF on keeping the levy affordable.”