The £219bn final salary pension deficit in the private sector is no reason to panic, according to the statutory body set up to meet funding shortfalls.
The Pension Protection Fund (PPF), established five years ago to guarantee pension funds when firms go bust, announced this week that the deficit had doubled in a year. Nine in 10 of the 7,783 schemes, including final salary pensions analysed by the PPF, now had insufficient funds to meet their liabilities if they went insolvent, it added.
However, speaking to Personnel Today, a spokesman insisted the PPF would be able to fund schemes when needed without a bail-out from the Treasury.
“That’s what we do. We are not like an insurance firm and don’t have regulatory capital. We can run with a deficit and can take on more deficit. It’s no concern that we’re running with a deficit.”
He added it was an “unlikely scenario” that all firms overseen by the PPF would go insolvent requiring funds simultaneously, ruling out that the PPF was in danger of failing to meet liabilities. “I just can’t see that happening,” he said.
The PPF had several options available to raise the £700m levies it collected each year to guarantee funding, the spokesman added. But employers would only see their levies increase in line with earnings until the economy recovered.