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Pension Protection Fund

Volume 487: debated on Wednesday 28 January 2009

To ask the Secretary of State for Work and Pensions how many pension schemes have applied for protection under the Pension Protection Fund in the last two years. (248814)

The Pension Protection Fund (PPF) pays compensation to members of defined benefit and hybrid pension schemes which are underfunded at the point their sponsoring employer experiences an insolvency event. Pension schemes do not specifically apply for protection under the PPF but they are required to notify the PPF in the case of an insolvency event. Notifications are required for all occupational pension schemes although only defined benefit and hybrid schemes are eligible for PPF compensation.

Following notification, eligible schemes enter an assessment period, after which they may enter the PPF.

The relevant figures are in the following table:

Notifications received from all schemes

Schemes entering the PPF assessment period

2007

1,646

115

2008

2,725

112

As at 31 Dec 2008, 289 schemes were in the assessment period.

Since the PPF opened in April 2005,106 schemes have completed assessment, of which 68 have entered the PPF.

To ask the Secretary of State for Work and Pensions what the increase in the size of the Pension Protection Fund's deficit was in (a) each year since 2004 and (b) 2009 to date. (248815)

The Pension Protection Fund (PPF) was established by the Pensions Act 2004 and opened its doors for business on 6 April 2005. The deficits recorded in the annual accounts have been as follows:

Deficit (£ million)

2005-06

343

2006-07

609

2007-08

517

Audited figures for 2008-09 are not yet available.

To ask the Secretary of State for Work and Pensions what provisions he has made in respect of the future of the Pension Protection Fund; and if he will make a statement. (248816)

This Government made robust provisions for the Pension Protection Fund (PPF) through the Pensions Act 2004. The PPF is managed by an independent Board and is designed to work in a benign environment and in a downturn.

The PPF provides security and reassurance to around 12 million members of the defined-benefit pension schemes that it protects.

The PPF paid out compensation of around £3.7 million between 2 December 2008 and 1 January 2009 and has around £3 billion in assets. There are no liquidity problems for the PPF, and compensation continues to be paid. The PPF is like a pension scheme and that it only pays out compensation when it falls due.

The Government, the PPF, the Pensions Regulator are monitoring the economic and financial situation carefully to asses how to respond to different scenarios. We continue to keep all these issues under review, to ensure that we have a flexible, proportionate and effective pension protection regime.