The reserves held by the Pension Protection Fund to pay future claims fell by 16.4% to £5.1 billion ($6.3 billion) in its latest fiscal year, as the coronavirus hit its return-seeking assets.
The PPF said in its annual reports for the year ended March 31, published Thursday, that the drop in reserves "is a reminder that we cannot be complacent," with many of the pension funds it protects underfunded and with potentially worsened positions due to the pandemic. The PPF is the lifeboat fund for the defined benefit plans of insolvent U.K. companies.
Despite the market turbulence caused by the COVID-19 pandemic in the final quarter of its fiscal year, its investments returned 5.2% — the same return as in the previous fiscal year. Assets grew 12.5% to £36.1 billion but liabilities increased 24.2% to £28.7 billion.
The PPF's funding ratio fell to 113.4% from 118.6% a year previous.