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The Actuary The magazine of the Institute & Faculty of Actuaries

PPF funding ratio falls to 93.7%

The updated PPF 7800 Index - which comprises 6,533 schemes - showed the funding ratio fell from 99.2% to 93.7% at the end of July 2011. Furthermore, the funding ratio is lower than the 98.9% recorded in July 2010.

Total scheme assets stood at £101.4bn at the end of July 2011, over the month scheme assets fell by 0.26% and over the year there was an increase of 9.8%.

Total scheme liabilities were £1068.7bn at the end of July 2011, an increase of 5.6% over the month and an increase of 15.9% over the year. Of these, 4,684 schemes were in deficit, and 1,849 schemes were in surplus.

Funding positions and liabilities were calculated on a section 179 basis which reflects the premium that would need to be paid for an insurance company to take on the payment of PPF levels of compensation.

The PPF said the year-on-year comparison was affected by the changes in assumptions for s179 valuation which took effect from April 2011 and raised liabilities by 3.6% and reduced the aggregate balance by £34.9bn. The assumptions had previously been revised in March 2008 and October 2009 when the impact was to improve aggregate funding by £48.0bn and £74.5bn respectively.