The Purple Book reveals improvement in scheme funding despite £129bn deficit

The Pension Protection Fund (PPF) has today published The Purple Book 2021 which showed an overall improvement in scheme funding despite an aggregate deficit of £129bn across underfunded schemes. 

The Purple Book, also known as The Pensions Universe Risk Profile, is now in its 16th edition and gives the most comprehensive overview of the risks posed by the UK defined benefit (DB) schemes protected by the PPF. The latest edition now includes interactive features.

It reported that while the overall net funding position improved to a surplus of £46.9 billion, just under half of schemes remained in deficit at 31 March 2021.

The aggregate funding ratio also increased by 7.9 per cent to 102.8 per cent, but this increase was mainly the result of market movements seeing liability values being driven down by more than the decrease in asset values.

Lisa McCrory, the PPF’s Chief Finance Officer and Chief Actuary, said: “While it’s positive to see such an improvement in scheme funding, we’re extremely mindful that this has mainly been driven by market movements and not a proportional increase in scheme de-risking. 2,525 of the 5,220 schemes under our protection remain underfunded and have an aggregate deficit of £129bn. Many of these schemes have individual deficits which would, if they were to claim, have a significant impact on our balance sheet. 

“Despite this risk and the ongoing economic uncertainty around insolvencies post-furlough, we remain confident in our ability to face future claims. Our funding position is very strong, as is our probability of success, and we want to reassure the 9.7 million DB pension savers under our protection that we’re in an excellent position to continue to protect them.”

To provide detailed insight into the report, the PPF is hosting an independent webinar at 10am on Thursday, 9 December for industry experts, trustees and other pension professionals. The webinar will delve into the detail of the report, including the continuing trends in scheme de-risking and asset allocation, and allow participants to ask questions and hear from Lisa McCrory about how the PPF uses this data to shape its funding and investment strategies. 

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