The Pension Protection Fund (PPF) has reported a £1.8bn surplus at the end of 2012/13 and increased the probability of being self-sufficient by 2030 to 87%.
The PPF’s 2012/13 annual report, published today, has revealed as at 31 March 2013 the fund achieved a return of 11.1% on its invested assets which, including levy income and assets from transferring schemes, grew by £3.8bn – from £11.1bn in 2011/12 to £14.9bn in 2012/13.
This represented an improved funding level of 109.6% versus 106.9% the previous year.
As a result the lifeboat fund has increased the probability of meeting its long-term funding target of self-sufficiency by 2030 to 87% from 84% at 31 March 2012.
This comes despite claims on the lifeboat fund during the year totalling more than £1bn – a record for the PPF – because of the weak state of funding of pension schemes, in large part a reflection of current levels of interest rates.
The PPF said the main reason for this outperformance came from global equities which delivered a 16.3% average index return and global bonds which delivered a 4.8% average index return. The report said the fund added a further 1.4% over these indices by actively managing the portfolio.
Elsewhere, the fund’s invested assets beat its liability benchmark by 4.6% compared with 2.1% during 2011/12 – more than double its targeted growth rate.
PPF chairman Lady Barbara Judge (pictured), said: “We remain firmly on our glide path to financial self-sufficiency in 2030. During 2012/13, we recorded another year of rapid growth, both in the numbers of members benefiting from our protection and the amount of assets we now have under management.”
Judge added: “Despite notable claims since March 2013, we remain financially strong and the probability of meeting our 2030 target remains broadly the same. Our 2030 funding target is a key milestone for the PPF so staying on track to hit that target will be of great reassurance to both our levy payers and members.”
But, PPF executive director of financial risk Martin Clarke stressed, “no models are infallible and we cannot guarantee the outcomes that we predict which is why we carry out multiple runs of the model to test how sensitive the output is to a range of changes in key assumptions”.
Last year the PPF took on assets totalling almost £2.15bn and some 43,904 people from schemes which completed assessment and transferred to the PPF during the year. A total of 172,018 people have transferred to the PPF since it began in 2005.
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