The Pension Protection Fund (PPF) increased its funding ratio to 156 per cent and reserves to £12bn during the year financial year ending 31 March 2023.
In its annual report and acccounts the PPF claimed it had a delivered a strong investment performance and maintained its financial resilience despite challenging market backdrop, and achieved a 98 per cent member rating satisfaction for PPF and the Financial Assistance Scheme (FAS) and 96 per cent for levy payers.
PFF reserves increased by £0.4bn on the previous year; the growth in the funding ratio was a result of reported liabilities falling by 25 per cent over the year as a result of interest rate rises.
The PFF said it had concluded payments for the 80 per cent of PPF and FAS who were needing an uplift as a result of the European Court of Justice (ECJ) Hampshire ruling or uncapping, remaining member payments will be completed during the rest of this year.
The fund which protects 9.6 million members in defined benefit (DB) schemes paid out £1.2bn to members during the period.
Funding review
Oliver Morley, chief executive of the PPF said: “As we mark the end of another eventful year, I am pleased to report that we’ve been successful in achieving our objectives for 2022/23. Despite all the challenges we’ve seen over the year, including market volatility, we’ve continued to deliver on our mission, move forward with our strategic plan, and meet our goals.”
The report said the Funding Review carried out last year recognised that it financial position, coupled with changes in its risk profile, meant it was moving into a 'maturing’ phase which saw it start transitioning to a lower levy.
Other proposed changes to the PPF’s future approach are reported in the DWP’s review of the PPF, which included recommendations for the PPF to share its good practice more widely, and for the DWP and the PPF to consider whether our capabilities and skills could be used in other ways for public benefit.
DB scheme assets
Oliver Morley added: “Our funding review gave us assurance that we could lower the levy without risking the security of our members’ benefits. Last year we reduced the levy significantly, and as we maintain our financial resilience, we expect our reliance on levy to further reduce. We trust our strong financial position and proven track record performing our role protecting DB schemes continues to give confidence to our current and future members, and levy payers.
Morley also addressed the Mansion House reforms, with the government is currently seeking views on how DB schemes assets could be used to deliver good member outcomes through consolidation and a wider investment remit whilst also supporting the wider economy.
He added: "Our past experience in consolidating more than 2,000 schemes, and significant success in generating returns through growth assets whilst improving member security, has demonstrated that this is achievable, and we are willing and ready to play our part.”
The PPF is one of the UK’s largest asset owners with £32.5 billion of assets under management. It also administers the Fraud Compensation Fund (FCF), the Government’s Financial Assistance Scheme (FAS) and across both the PPF and FAS looks after nearly 440,000 members.
