Despite difficult economic conditions, the Pension Protection Fund (PPF) says it remains in good shape to face future challenges and is confident that it can continue to look after its members' futures.

This, it says, is largely down to a robust investment performance during 2011/2012.

In their annual report the PPF shows a return on invested assets of 25% (as of 31 March). A good performance which is a result of its liability matching strategies. The PPF says this return is "more than sufficient" to offset the PPF's rise in liabilities in what have been turbulent financial markets.

At the same time the PPF had a £1.07bn surplus over liabilities, up almost £391m compared to the year before.

Membership with the PPF also increased to 128,000 people, and it was managing £11.1bn of assets – a rise of £4.7bn from 2010/11.

The PPF's chairman, Lady Barbara Judge, said: "Our overall performance should give our members continued confidence in our commitment to provide their retirement compensation for as long as they need it.

"We cannot rest on our laurels, however. Already this year, we have seen claims on the PPF of more than £700m – and a significant deterioration in the deficits of many of the other  pension schemes that we protect. We are determined, however, that the PPF should remain strong enough to weather these storms."

Simultaneously with their accounts the organisation also published an update on its long-term funding strategy which sets out the probability of successfully achieving its 2030 target. The PPF's objective is to be financially self-sufficient by that year.

Chief executive, Alan Rubenstein, said: "While we are still on course to meet our aims of being self-sufficient by 2030, the probability of achieving this fell during the year from 87% to 84%. Although this figure is still above our comfort level, we remain ever vigilant about events which will reduce this probability even further.

"Foremost in our minds has been the continuing global financial crisis and the adverse effect it has had on the funding positions of UK pension schemes. Increased claims on the PPF have already meant that our own funding level has fallen from 106 per cent in March 2012 to about 102 per cent and that levies are likely to rise in the short-term."

First published 23.10.2012

azeevalkink@wilmington.co.uk