The lifeboat fund's reserves have fallen by £0.6bn but investment performance weathered significant market volatility, increasing assets under management by £2bn.
In its annual reports and accounts for 2018/19, published today (4 July), the Pension Protection Fund (PPF) revealed its funding ratio fell by 4.2 percentage points to 118.6% following its absorption of the Kodak Pension Plan No.2 (KPP2) - the largest claim on the fund to date.
Its reserves used to fund future claims have depleted to £6.2bn, but chief financial officer Andy McKinnon said the buffer was still "over and above what we need to pay our current members and their dependents for the rest of their lives".
He added: "We need these reserves to cover future claims, and we had anticipated the KPP2 claim. But despite having a buffer we are not complacent. Our biggest risk is the funding level of the schemes we protect and scheme deficits remain high."
However, investment returns in the year to 31 March 2019 were strong at 5.2%, beating its three-year return target, and the value of its assets increased from £30bn to £32bn. It is still on track to achieve its investment objective of assets outperforming liabilities by 1.8% over the PPF's lifetime.
The lifeboat fund now has around 400,000 members, and an additional 150,000 members of schemes in PPF assessment.
Chief executive Oliver Morley said members of defined benefit (DB) pension schemes "can be reassured of our protection".
He added: "Our steady investment and funding approach over the coming years will help us to make sure we can provide a secure retirement for all our current and future members.
"Over the coming years we will continue to provide a valuable service for our members, to maximise value for our levy payers, and to play a worthwhile role in our community as well as the industry. We expect challenging times ahead but we are confident our funding strategy is on course to see us through them."
During the year the PPF also insourced the member services of the Financial Assistance Scheme, launched a new website and said it reached 97% member satisfaction.
In March this year the KPP2 entered PPF assessment after it became clear that Kodak Alaris would not be able to generate sufficient income to support the scheme's liabilities in the long term. In 2013, after Eastman Kodak filed for bankruptcy protection in the United States, the PPF and The Pensions Regulator gave permission for a new scheme, KPP2, to be created. The scheme bought a number of Eastman Kodak businesses through the new entity called Kodak Alaris.
Just Group has completed a £74m pensioner buy-in with the UK pension scheme of a US-listed engineering business.
The Smiths Industries Pension Scheme has secured a £146m buy-in with Canada Life in its fourth bulk annuity and its sponsor’s tenth overall.
The Prudential Staff Pension Scheme has entered into a £3.7bn longevity swap with Pacific Life Re, insuring the longevity risk of over 20,000 pensioners.
The Baker Hughes (UK) Pension Plan has secured approximately £100m of liabilities through a buy-in with Just Group.
There have now been a total of 30 longevity swaps over £1bn publicly announced. The full list, provided by Willis Towers Watson and through PP research, is as follows...