PPF fulfils strategic priorities and may lower the levy

The PPF’s 2021-22 annual report and accounts show that the lifeboat fund has successfully met the strategic priorities outlined back in 2019, these being focused on sustainable funding, innovation, customer service, corporate culture and value for money — though it noted that “a small number of milestones were achieved behind schedule”.

Investment performance was likewise a cause for celebration, the PPF funding ratio now standing at 137.9 per cent and its reserves at £11.7bn. The fund was keen to champion its focus on sustainable investment, having seen its global forestry portfolio rise by 20 per cent in value to hit £1bn.

The PPF will now carry out a review of its long-term funding strategy, with the results to be published “in the coming months”, and this will involve reconsidering the risks the fund faces and how its approach may need to change.

It said the “emerging conclusion” was that it would have to increase the focus placed on financial resilience in its funding objectives, which could include revising the role played by the levy. Changes to the levy will be considered in the 2023-24 levy consultation due in September.

PPF chief executive Oliver Morley said: “This year, we’ve paid out £1.1bn 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 9.7mn members in the [defined benefit] 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.”

Of the levy, Morley said: “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.”

He added: “We will also rethink our levy system and ensure it’s 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.”