Pension Protection Fund, London, outlined a new three-year strategy, with plans for refreshed governing legislation, a pledge to learn from best practices among its peers, and enhanced diversity and climate-related goals.
The £32 billion ($41.4 billion) lifeboat fund for the defined benefit plans of insolvent U.K. companies on April 3 released its 2025-'28 strategy — the first under new CEO Michelle Ostermann. In the strategy, the PPF noted that the laws by which it is governed are now 20 years old, and while legislative change is ultimately down to the U.K. government since it is a public body, “the PPF recognizes that the time is right for a review in a number of key areas,” it said.
The strategy revolves around four strategic priorities: to adapt and evolve; to build on strong foundations; to shape change in the pension industry; and to act in the interests of those the PPF protects.
Under its priority to adapt and evolve, the PPF said it will work to benchmark its key functions to relevant peers, both in the U.K. and around the world, “in order to identify and implement beneficial changes that will ensure we operate both efficiently and effectively.” In an exclusive interview in January, Ostermann outlined a more modern vision for the fund, and told Pensions & Investments of the PPF’s “global caliber.”
While evolving and reviewing its funding framework, the PPF will also look to identify and learn from relevant practices in comparable institutions, the strategy said. PPF executives will also leverage technology, increasing the use of artificial intelligence where appropriate.
When it comes to building on strong foundations, the PPF strategy focuses on a number of goals, including to develop and implement a “new people strategy that supports the goals of this three-year plan and the culture we need to be successful.”
Under its diversity, equity and inclusion strategy, it will for the first time focus on social mobility, ensuring the fund has “access to the widest pool of talent, so that our organization reflects our community, and that all our people can contribute to their fullest extent.”
On climate change, the PPF will establish a view on transition requirements, reflecting changing expectations and best practices, as well as undertaking a gap analysis and developing a “clear view on our climate change transition pathway, underpinned by the best possible data on the impacts of the investments we hold.” The fund also reiterated its commitment to reaching net zero in its operations by 2035.
To help shape the pension industry, the PPF will work with the government to reduce costs for pension funds and their sponsoring employers by revising legislation related to its external funding. It plans to create a framework that allows for a zero levy, but also allows for that levy to be reintroduced should it be necessary. And in terms of acting in the interest of those the PPF protects, it will work with the government and other stakeholders to consider how skills, capabilities and resources might be leveraged to further support improved outcomes for current participants and employers that pay the levy.
The PPF, which celebrates its 20th birthday this week and marked the occasion with an event held at the House of Commons, has paid out more than £10 billion in compensation payments and transferred more than 2,000 pension funds.
“As we build on the strength of our first two decades, the expertise, operational excellence and reputation we’ve built up puts us in a unique position to make a real difference,” Ostermann said in a news release accompanying the strategy. “Our commitment to deliver for our members, our future potential members — for whom we hold significant reserves to backstop the entirety of the industry — and our levy payers remains unwavering. We look forward to the next phase of our journey and to continuing to work with our government and industry partners to make a meaningful contribution in the U.K. pensions landscape.”
