PPF: The Purple Book 2020

On 2 December 2020 the PPF published ‘The Purple Book 2020’. Their 15th edition of the book highlights the increased risk in the universe of defined benefit (DB) pension schemes as the number of schemes in deficit continues to increase. The Purple Book is vital for the PPF understanding the risks they face as an organisation with obligations to their members, and provides the most comprehensive data on the UK universe of DB pension schemes in the private sector.

In the overview, PPF shows that in 2020, the value of schemes in deficit rose to £229bn, an increase from £160bn in 2019, demonstrating a £69bn worsening in funding level of DB schemes. Similarly, in the year to 31 March 2020, 41 schemes entered PPF assessment, which is higher than the preceding year when 26 schemes entered assessment.

The large-scale disruption caused by COVID-19 has materially impacted the UK economy. The PPF is expecting a greater number of insolvencies this year than last, as government support measures will begin to ease, leaving many employers particularly vulnerable or with no choice but to cease operations.

Overall, the Purple Book 2020 edition emphasises the need for commercial Superfunds in the DB market, now more than ever. Superfunds have the ability provide additional security to members through replacing a deteriorating employer’s covenant with a pre-funded financial covenant, and can play a helpful part in the orderly run down of the increasingly mature DB universe.

The Purple Book 2020 by The Pension Protection Fund. Read the full report here: https://www.ppf.co.uk/news/purple-book-2020