Pension Protection Fund: Department for Work and Pensions
The Stationery Office, Feb 5, 2010 - Business & Economics - 38 pages
The Pension Protection Fund offers protection to some 12.4 million pensioners in private sector defined benefit (often known as final salary) pension schemes should their employer become insolvent. The Fund currently manages its assets well and has not been exposed to severe losses in the recession. In 2008-09, the Fund's investments increased in value by 13.4 per cent. The Fund's standard investments saw a return of minus 3.4 per cent in 2008-09 (against the market average for the same combination of asset classes of minus 3.6 per cent). But, as the Fund's assets grow, the investment operation will require additional skills and the Fund should consider adapting its investment processes. The Fund's deficit increased during the recession - from £517 million in March 2008 to £1.2 billion in March 2009 - largely because of the combined deficit of the increased number of schemes being assessed on whether they should be transferred to the Fund. However, the value of the Fund's assets far outweighs its annual compensation payments: at the end of March 2009 its assets were £3.2 billion but its current compensation payments amount to £70 million a year. The Fund has developed a suitable model to assess future liabilities and this has proved resilient to a range of stress tests. The model's longer-term projections are sensitive to important assumptions, so the Fund should establish a framework for illustrating the sensitivity of output from its long-term risk model.
What people are saying - Write a review
We haven't found any reviews in the usual places.
3-month London Interbank accruing benefits additional financial deals assessment period asset allocation Asset Class assets and liabilities become insolvent benefit pension schemes best practice CJ CN CN CJ CN CN CN default against Credit defined benefit pension defined benefit Schemes downturn facing the Fund Figure Financial Services Authority Fund's assets Fund's deficit Fund's investment strategy Global Bonds GOldman Sachs Government Accountability Office HM Treasury increased interest rates Investment Committee investment managers investment operation investment team Liability Committee Long Term Risk median outcome million National Audit Office Overleaf paragraph Pension Benefit Guaranty Pension Protection Fund Pensions Act 2004 Pensions Regulator Pensions Regulator's potential future liabilities private Sector defined probability of default recessionary scenarios recover its deficit risk assessment risks facing Sector defined benefit September 2009 Sheffield Forgemasters short term Source stakeholders Stewardship Strategy Benchmark target Term Risk Model transferred pension schemes trustees UK Equities