On the go: The Pension Protection Fund has no intention of reviewing its investment strategy and its use of liability-driven investments in response to recent market volatility.
In September, the lifeboat announced the outcome of its funding strategy review and its plans to reduce its reliance on the PPF levy, which it aims to slash by £400mn by 2023-24.
The funding review concluded that the PPF had entered a “new phase” in its funding journey, which will see the levy reduced to £390mn in 2022-23 from £630mn in 2021-22, and then again to £200mn in 2023-24.
A PPF spokesperson told Pensions Expert that the recent market turmoil, during which a surge in gilt yields prompted collateral calls for derivative-linked investment strategies, would not trigger a review of the fund’s investment strategy and its use of LDI.
Speaking to the Financial Times, PPF chief investment officer Barry Kenneth confirmed that the fund met £1.6bn in collateral calls.
“The PPF has plenty of liquidity with a substantial amount of assets in both cash and gilts and so we have been able to satisfy the collateral calls in good order,” Kenneth told the FT. The PPF has since been repaid around £1bn in cash collateral as the value of gilt yields has dropped.
The PPF also recognised the concerns among members caused by recent market turmoil. The fund said that it had been proactively communicating with members.
“Recent market stresses will understandably have caused concern amongst pension savers,” PPF chief executive officer Oliver Morley said. “It’s important that members of defined benefit schemes understand that we’re here to protect them if needed.”
“We're confident in the strength of our funding position,” he continued, “which has improved significantly in recent years, principally driven by the strong performance of our investment team and careful risk management.”
