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Seventh Purple book published by the PPF and the Regulator
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Highlights trends in scheme funding and asset allocation
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PPF remains vigilant so it remains on track to meet 2030 funding target
The Pension Protection Fund (PPF) and the Pensions Regulator (the regulator) today (Wednesday) published the latest version of the Purple Book.
This is the seventh edition of the publication which monitors the risks faced by predominantly private sector defined benefit pension schemes throughout the UK. Movements in these risks can have an impact on the PPF's aim to be financially self-sufficient by 2030.
PPF Executive Director for Financial Risk, Martin Clarke, said:
"The Purple Book provides us with an invaluable barometer about the changes in risk that we face as we endeavour to hit our 2030 target.
"While we remain on track to meet our funding aims, the Purple Book shows that we have to be extra vigilant about the continuing global financial crisis and the adverse effect it is having on the funding position of UK pension schemes. That way we can plan to mitigate any obstacles which may prevent us meeting our aims." The Pensions Regulator's Chief Executive, Bill Galvin, added: "This publication gives us an important insight into the state of play for DB schemes and the risks they face. We appreciate that the current economic situation presents a continuing challenge to trustees - low interest rates and low gilt yields have contributed to increased liabilities and deficits for many DB schemes. "However, rising deficits do not necessarily result in higher contributions for sponsors. The UK regime offers flexibility, including the option to increase recovery plan lengths or provide non-cash guarantees. We are also engaging proactively with a number of schemes currently working through their valuations."
Purple highlights include:
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Scheme funding on a s179 basis deteriorated in the year to 31 March 2012 - the funding ratio (assets divided by liabilities) fell from 100 per cent to 83 per cent.
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The proportion of schemes that are open to new members and new accruals continued to decline.
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The proportion of scheme assets allocated to bonds and alternative investments continued to rise.
Much of the analysis contained in this latest edition is based on new information provided by schemes to the regulator between December 2011 and March 2012.
The Purple Book 2012 is based on 6,316 schemes, representing about 12 million members. This accounts for about 98 per cent of the estimated total number of PPF-eligible schemes in the UK and more than 99 per cent of estimated total liabilities.
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