Pensions safety net deficit doubles

The pensions safety net has seen its funding deficit double during the past year as a record number of pension schemes needed bailing out, according to a report.

The Pension Protection Fund (PPF) said its funding shortfall had soared to £1.23 billion at the end of March, up from £517 million 12 months earlier.

The scheme, which steps in to pay pensions to people whose companies have gone bankrupt, has come under increasing strain from the rising number of firms collapsing.

Around 63 pension schemes were accepted into the PPF during the past 12 months, the highest number since the scheme was first set up in 2004. A further 342 pension schemes are going through the PPF's assessment period.

But the PPF stressed that despite its funding shortfall, it was confident it would be able to pay all the pensions it was responsible for as they became due.

It added that by the end of September, a combination of rising stock markets and a lack of big claims being made on the fund helped push its deficit back below the £1 billion mark, meaning it was 90% funded.

PPF chairman Lawrence Churchill, said: "We expected that this year's claims would be larger than our levy so we were not surprised by these figures which have been impacted by market volatility and low interest rates. More importantly, the pension protection framework has proved resilient in testing times and our confidence that we can continue to pay our members the compensation they are due is undiminished."