The U.K. Pension Protection Fund's deficit will likely lead to increased payments for U.K. pension plans, confirmed Mercer Human Resource Consulting spokeswoman Jackie Barber.
The U.K.'s pension insurance fund has %A3;1.88 billion ($357.1 billion) in assets and %A3;2.43 billion in liabilities, according to its annual report, released today. The shortfall is mitigated in part by %A3;138 million in levies collected between April 2005 and March 2006.
"Levy rises are inevitable as the real cost of the fund emerges," according to a news release from Mercer. However, "there's a big undershoot here that can't go uncorrected," Tim Keogh, worldwide partner, said in the release. "If there is a shortfall during times of few corporate insolvencies, the levy must be unsustainably low."
"We indicated last year that we expected deficits in the early years of the fund's life," PPF Chairman Lawrence Churchill said in a news release. "We have and will continue to have sufficient assets available to meet compensation payments as they fall due, and we aim to raise our solvency level of 86% funded as the organization and the fund mature."