Deficit doubles for pension safety net

Thursday, 05 November 2009 12:00

The UK's Pension Protection Scheme's (PPF) deficit has doubled after the financial crisis pushed more firms into administration.

The PPF is a safety net and pays out when a company goes bust leaving insufficient funds in the workplace pension scheme.

But a rise in the number - and value - of pension schemes claiming on the PPF over the year to March 31st has increased the deficit from £517 million in 2008 to £1.2 billion.

The PPF accepted around 63 pension schemes during the year, the highest number since the scheme was first set up in 2004. A further 342 pension schemes are currently being assessed.

Since March, the deficit is thought to have fallen back to the £1 billion mark, as economic conditions improve.

PPF chairman, Lawrence Churchill, said: "The economic downturn has highlighted how vital PPF protection has been. None of us would want to go back to an era where people lost their pension as well as their jobs.

"We expected that this year's claims would be larger than our levy so we were not surprised by these figures which have been impacted by market volatility and low interest rates."

The scheme is funded by charging a levy on existing workplace pension schemes.

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