PPF reveals £678m surplus

UK - The Pension Protection Fund has published its annual report – revealing a surplus of £678m ($1.1bn) at 31 March.

The annual report revealed the lifeboat fund had seen its surplus increase by £248m from the previous year and funding levels increase from 103.3% at the end of March 2010 to 105.1% at the end of March this year.

The PPF reported investment returns of £214m or 4.7% during the year - 0.7 percentage points in excess of its LIBOR benchmark.

It said these figures meant that the probability of the PPF achieving financial self-sufficiency by its target date of 2030 increased from 83% at 31 March 2010 to 87% at 31 March 2011.

PPF chairman Lady Barbara Judge said: "While our results are encouraging in the short-term, they must also be seen in the context of our long-term objective to become financially self-sufficient by 2030 - and they confirm that we remain on track to achieve that objective.

"While we may have ridden the storm well so far, we cannot afford to be complacent and we remain vigilant to any risks to our future funding. I believe this gives the people who receive our compensation continued confidence in our ability to pay that compensation for as long as they need it."

PPF chief executive Alan Rubenstein (pictured) added: "The period since the end of March 2011 has seen difficult times in the financial markets and this has affected our funding, although we have fared better than other pension schemes because of the nature of our investment strategy.

"This highlights the importance of continually reviewing our funding strategy. The update we have published today is the first formal review we have carried out since we launched the strategy in 2010 and reflects new factors which may affect its chances of success."

He added: "After thorough analysis, we report that, despite these new factors and the challenging economic environment, our ultimate target remains the same. We believe this will give all our stakeholders the confidence that we can meet our long-term funding aims."

The PPF also revealed running costs of £31.3m during the year - costs £3.3m, or 9.5% lower than the budget of £34.6m.

In the 12 months to the end of March 2011, 170 schemes completed PPF assessment, beating the 2010/11 target of 135, and the organisation had transferred 287 Financial Assistance Scheme funds, beating its target of 250.

Further details about the PPF's long-term funding position can be found in the PPF funding strategy update which has been published alongside the annual report.