In assessing the events of 2017/18, I’m reminded not just of the work of industry and TPR colleagues but of the excellence and the dedication my colleagues at the Pension Protection Fund (PPF) provide.
That’s the team of people who manage complex insolvency scenarios, our investment portfolio, our levy payers and our members, and together give reassurance to the 11 million people we protect.
So, where to start? The year has seen a number of high profile claims including the British Steel Pension Scheme, Carillion and Hoover. The total value of claims for the year is the largest we have seen at £1.2 billion, and 65,386 people have directly benefited from the protection we provide after their defined benefit (DB) pension scheme entered the PPF assessment. Despite this, the PPF remains robust and well equipped to meet the financial challenges that exist within the DB pensions universe we protect, which includes absorbing large insolvencies like Carillion. This is what we are here to do.
Our Annual Report and Accounts (PDF, 2MB, 89 pages) highlights that our reserves have grown to £6.7 billion and our funding level is at 122.8%, but we are not complacent. Risks remain in the pensions universe we protect and we could see more large claims come to us in the future. To further strengthen our financial position we’ve worked hard to build the investment function we have today, and our assets under management now stand at £30 billion. This represents a £1.2 billion increase on last year and can, in part, be attributed to the successful insourcing of our liability-driven investment (LDI) programme and cash fund moving in-house. Having this control strengthens our ability to be flexible in the investment space and is crucial to our long-term sustainability. Our approach to funding and investment, as set out in our Funding Strategy and Statement of Investment Principles, means we are well positioned to meet our funding target of being self-sufficient by 2030.
We aim to give our members the best possible service, and provide clear channels of communication in what can be challenging and uncertain times for them. We’re proud that our Member Services team were awarded with the Institute of Customer Service ServiceMark accreditation for their customer care and that our member satisfaction on our phone and website service is 97.8%.
We also continue to improve the channels our members use to understand their benefits and make decisions about them. Our innovative tool ‘Retire Now’, launched earlier this year, allows members to retire online. This, in combination with our online Benefit Modeller, lets our members not only plan their retirement, but retire online at the click of a button.
The PPF works to protect the interest of members with other bodies including TPAS, government bodies and The Pensions Regulator (TPR). Our success is the result of close collaborative work with colleagues from these organisations, and in particular Lesley Titcomb and her team. TPR is responsible for reducing the risk of pension schemes ending up in the PPF. This means we both have a shared interest in reducing potential claims on the PPF and reassuring UK defined benefit pension scheme members. Our partnerships and engagement with TPR and other key organisations and key stakeholders continues to ensure that the PPF represents the benchmark of service for DB pensions today and throughout the years to come.
As we look ahead, I am confident in the PPF’s mission to pay the right people, the right amount at the right time. The PPF has seen the unfortunate collapse of some large companies during 2017/18 but we are here to give reassurance to pension scheme members and remind them of our financial strength and ability to protect their futures. As Chief Financial Officer I look forward to playing my part in delivering the PPF’s strategic plan over the next three years and continuing to provide financial reassurance to pension scheme members. I also look forward to continuing to work closely with colleagues at TPR as well.
By Andy McKinnon
Chief Financial Officer at the PPF