The Pension Protection Fund (PPF) is at a really interesting juncture in how its funding strategy will evolve now that it is currently undertaking a stakeholder engagement programme to support its ongoing strategy review. The PPF previously reported a probability of success of 95%, which was ahead of its 90% target, prompting a review of the funding strategy, which will take into account all factors. Speaking at the Pensions Age Spring Conference 2022, PPF head of actuarial levy and policy, Jay Khimji, said the growth in reserves means the PPF would be decently well placed to withstand potentially high levels of claims from schemes, without risking the security of members’ benefits. However, whilst this all feels like good news, it’s important to remember that there are still today schemes out there with large deficits, and there’s potential for economic and geopolitical headwinds. As such, the PPF is examining all factors. During the session, Khimji also discussed the PPF’s new rules for alternative covenant schemes, which have their levy calculated in a different way to other schemes to reflect that the main risk posed by these schemes is investment risk, rather than a failure of a corporate business. Whilst Khimji acknowledged that there are not many, if any, scheme’s falling into this definition yet, he emphasised the need for the PPF to recognise the potential for the market to evolve in this way.

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