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PPF unveils self-sufficiency plan
Wed, 08 Feb, 2012
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PPF unveils self-sufficiency plan
Wed, 25 Aug 2010, 15:57:00
The Pension Protection Fund (PPF), the underwriter for company pension schemes, has unveiled a 20-year plan to build its financial position to cope with the dwindling number of final salary schemes. The PPF intends to build its solvency ratio to 110% over the next 20 years from 88% at March 2009. This new buffer would give "Protection both against the longevity risks we have not been able to hedge out and against potential insolvency for the schemes still in operation," chief executive Alan Rubenstein told reporters. "As the levy shrinks, we want to demonstrate that we have a plan in place to be able to pay benefits to all claimants," Rubenstein said. The PPF's self-sufficient funding strategy is based on the assumption that employers meet pension commitments and will use derivatives to reduce potential risks. The PPF imposes a levy on firms providing final schemes to fund itself and admitted the cost could rise above this year's £720m to meet its target in some years before 2030. In March, the PPF published a "no-risk" investment allocation strategy that included a 70% exposure to bonds and cash with 10% in equities and the remainder in other asset classes. The PPF had assets of £4bn at March 2010, up from £1.45bn two years earlier. It now administers 150 underfunded pension schemes with 46,000 members.
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