The funding deficit faced by Britain's pension bailout fund more than doubled in the last year to £1.23bn.
The shortfall stood at just £517m last year and the Pension Protection Fund is now paying compensation to 12,723 people whose workplace pension was affected by their employer going bust.
That has increased from 3,596 members the previous year and comes against a background of rising insolvencies and large funding deficits in most company pension schemes.
However, a bright spot was the fund's investment performance – the PPF earned a return of 13.4 per cent on its invested assets, including gains of £318 million from a portfolio of hedging instruments. Without the hedges it would have lost 3.4 per cent. The figures were contained in the fund's annual report.
The fund could become Britain's biggest occupational pension provider as insolvencies rise. It takes on the investments of schemes whose sponsoring employers go bust.
Alan Rubenstein, PPF's chief executive, said the funding shortfall would be filled by recoveries from bankrupt employers, a levy on healthy schemes and further investment returns. Plugging the gap is likely to take until 2012 at the earliest.Reuse content