By 2012 the Pension Protection Fund (PPF) is expected to have around 250,000 members, and ultimately the number could double. The PPF came into existence because it was politically unacceptable for members of occupational pension schemes to be left without a pension when sponsors failed after employees had been encouraged by the government to save in such schemes. Another political reality is that the PPF cannot collect premiums fast enough to keep pace with the liabilities it is taking on: raising them to a market level is not an option for any hue of government. But the declining number of defined benefit occupational pension schemes – and thus a lower revenue base – will exacerbate the situation. At some stage it is even possible that the PPF will have to cut back on benefits, which in any event are subject to caps and limits. Yet the PPF’s benefits have to be regarded as secure and provide an effective benchmark for alternatives.
