UK - The Pension Protection Fund (PPF) has announced positive returns for 2009-10, leading to a £400m (€460m) surplus for the organisation.

The PPF said the strong returns - contrasting with last year's results, which left the fund with a £1.2bn deficit - were due to financial markets performing well, as well as less costly claims from insured schemes.

Chairman Lady Barbara Judge said she was encouraged by the figures, but warned against complacency.

Chief executive Alan Rubenstein also welcomed the news, saying it reinforced the PPF's view that the system was sound.

He added: "But I would stress that the PPF is not a short-term undertaking, which is why this change must be seen in context of our aim to become financially self-sufficient by 2030."

The National Association of Pension Funds chief executive Joanne Segars said it was important for the PPF to have a "foundation of sound funding" and that, together with the announcement of a revised levy, it had been a good year for the organisation.

"In the long term, the PPF must strike the right balance between being robustly funded and avoiding excessive burdens on pension schemes," she added.

Meanwhile, funding levels for FTSE 100 and FTSE 350 companies have improved by 7% since October last year, according to Pension Capital Strategies (PCS).

The consultancy added that scheme liabilities were set to drop by a further 10% once the switch from the retail price index to the consumer price index (CPI) had been completed.

PCS estimated that FTSE 100 now had a funding shortfall of £53bn, a 38% drop since October last year, with the FTSE 350 companies reporting a similar decrease.

Charles Cowling, managing director at PCS, said the picture was "somewhat rosier" than 12 months ago.

He added that the switch to CPI could mean savings of £120bn for private sector schemes, but said the scope of savings would remain uncertain until it became clear whether the government would produce the "necessary overriding legislation that would give maximum effect to the change".

Finally, the £3.2bn Lothian Pension Fund is tendering a seven-year contract for actuarial services to conduct as many as three triennial valuations for the scheme.

In its tender notice, Edinburgh City Council said the winning company would be asked to advise on changes in legislation, as well as mortality assumptions and negotiations undertaken with scheme trustees.

They would also be expected to offer advice on any future investment and risk strategies, as well as conduct the triennial valuations for March 2011, 2014 and potentially 2017.

Parties can obtain more information and register their interest online.

The scheme saw strong growth in 2009-10, reporting 34.5% returns across its portfolio, with more than 70% of assets invested in equity and 21.4% allocated to fixed income, with the remainder in the gilt market and held in cash.

Interested parties should request additional information by 22 November, with all applications due a week later on 29 November.

Topics