Pension Protection Fund turns huge deficit to surplus

The Pension Protection Fund said it had a 400m surplus at the end of the 2009/2010 financial year, up from a deficit of 1.2 billion 12 months earlier.

The fund, which pays retirement incomes to people who lose their pensions as a result of their company going under, credited the turnaround to improved financial markets and solid investment returns of 15 per cent during the year.

It added that it had also handled less costly claims during the 12-month period.

Alan Rubenstein, chief executive of the PPF, said: "The significant improvement in our funding is clearly welcome and reinforces our view that the PPF, and the protection system of which we are part, is sound.

"But I would stress that the PPF is not a short-term undertaking, which is why this change must be seen in context of our aim to become financially self-sufficient by 2030.

"Delivering on our long-term funding strategy is essential. In the end, that is the way we will provide reassurance to the millions of people whose pensions we protect that we can meet our long-term obligations and that their compensation, now and in the future, is safe in our hands."

By the end of the financial year, 46,429 people had had their pensions transferred to the PPF, 20,872 of whom were already receiving a retirement income from it, with the fund paying out a total of nearly 82m during the year.

A total of 150 schemes transferred to the PPF during the year, with a further 341 schemes in the assessment period. The PPF received 1.2 billion during the year from both assets transferred from pension schemes that had joined it and the levy paid by all companies with defined benefit pensions schemes.