Pension Protection Fund (PPF) levy-payers and claimants could be in line to benefit from a surplus in the lifeboat fund if it hits its long-term self-sufficiency target.
While no decision has yet been made, with the fund currently expecting to hit this target in 2030, its chief executive Oliver Morley said the board would be considering options on how to distribute the surplus over the coming year, with this being one possibility.
In an interview with the Financial Times, Morley, who joined the PPF in March, said: "If the PPF delivers on its plan, there is every chance that a surplus will be available for potential redistribution to levy-payers and members," he said.
However, he rejected the idea that a surplus should be used to grant a "levy holiday", noting "we would still need to collect [the] levy after the 2030 point".
Morley's comments come after a challenging year for the lifeboat fund, during which it has absorbed 46 pension schemes from failing employers. These include Carillion, one of its largest ever claims once the collapsed construction giant's 13 schemes are aggregated.
Despite this, its funding ratio increased from 121.6% to 122.8% by March this year, and has reserves of £6.7bn. While it also cut its probability of being self-sufficient by 2030 from 93% to 91%, this is still above its 88% chance target.
All-in-all, the PPF currently provides benefits for around 132,000 people across 236,000 members who have transferred. Since its creation, it has paid out £3.6bn in benefits to pensioners.
Willis Towers Watson senior consultant and director in its retirement practice Joanne Shepard said members impacted by the PPF compensation cap could have the most to gain.
"Talk of how any PPF surplus may be dealt with in the future is a welcome development," she said. "It seems reasonable that any surplus should be returned to levy-payers who have been required to pay funds into the PPF that are not then needed.
"There could also be a case for distribution of surplus to members who have had to accept a lower benefit by virtue of their scheme falling into the PPF."
The idea is similar to that of The Pension Superfund whose chief executive Alan Rubenstein - formerly PPF chief executive - has outlined plans for any surplus above 115% funding to be distributed between the consolidator's financial backers and members.
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