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The Actuary The magazine of the Institute & Faculty of Actuaries

PPF deficit could be almost £190bn

Independent benefits and investment consultancy Hymans Robertson has warned that tomorrow’s Pensions Protection Fund PPF7800 Index announcement could show a deficit of £188bn, an increase of £30bn on the figures reported in early August, with liabilities of over £1tn.

Martin Potter, partner at Hymans Robertson, commented: "Our projections show that the PPF’s assets have increased by £38bn in the past month, but that in the same period the liabilities have increased by a whopping £68bn to £1,024bn. This is the first time the Fund’s liabilities have topped one trillion.

"These worrying figures should not come as a surprise, as UK pension liabilities are maturing and growing. However, the figures emphasise the problems facing the PPF, which is set to become one of the biggest schemes in the UK in the coming years.

"We have been calling on the PPF and the Government to act now to prevent this situation from getting worse as corporate failures continue. The fairest solution would be for the PPF to reduce the rate at which it pays out benefits to a level that will be affordable in the long term, otherwise the Government will need to step in and underwrite the PPF’s commitments."