Top 10 Findings from the Purple Book of Pension Scheme Assessment

by Alexander Beard, on Feb 12, 2015 1:57:53 PM

PensionThe Ninth annual edition of the ‘Purple Book’ published by the Pensions Regulator and the Pensions Protection Fund organisation at the end of October, analyses the performance of the UK Private sector Direct Benefit Pension Schemes in the 2013-14 financial year. The top ten findings in the Purple Book report are:

  1. 1. The aggregate funding position of eligible schemes at 31 March 2014 was a deficit of £39.3 billion falling 81% from £210.8 billion the previous year.
  2. 2. The insolvency rate among sponsoring employers of eligible schemes rose less than the national insolvency rate during the financial crisis. The national insolvency rate has been falling gradually over the last two years while the PPF insolvency rate has fallen sharply over the last three quarters.
  3. 3. Schemes continue to de-risk as asset allocation trends continue but the decrease in equity shares has slowed.
  4. 4. Average asset allocations of UK equities continued to decline and, for the first time, overseas equity shares are more than double the UK equities share.
  5. 5. In 2013/14, the number of schemes paying no risk based levy decreased and represented 17% of total schemes, compared to 19% for 2012/13, as the smoothed level of funding used in the levy formula deteriorated.
  6. 6. Schemes which carried out bespoke stress testing on a voluntary basis reported a lower investment risk. 131 schemes performed bespoke tests, 331 carried out voluntary tests and 5,595 schemes followed standard test methodology for their standard 2013/14 levy calculation.
  7. 7. There was a significant reduction in long-term risk to the fund during 2013/14, largely a result of an improvement in the PPF’s own funding level during the same period.
  8. 8. In 2012/13, the PPF made compensation payments of £445.1 million compared to £203.1 million in 2011/12.
  9. 9. Total number of contingent assets in place for the 2014/15 levy year was about 780, somewhat lower than in the previous year. This reflected a fall in the number of Type A contingent assets.
  10. 10. Eligible schemes had, by April 2014, certified about £25.6 billion of deficit reduction contributions to reduce deficits for the 2014/15 levy year.