The Pension Protection Fund has published its updated management plan which reveals running costs for the organisation will almost double by 2009/10 to more than £22m from around £12m in 2006/07.
However, the figures in the 33-page document point out while the organisation will continue to grow costs over the next few years, due to a growing staff rate and increased consultancy and advisory services, it says the cost for each member admitted to the PPF should fall over time, from £126 to £85 by 2009/10.
The PPF says over the next three years investment in the resources and capabilities of the organisation will be focused on recruiting additional skilled staff and the “procurement of additional support services”, particularly for the assessment process and further automation around levy invoicing.
It says its administration fund costs will rise in future due to higher compensation activity, and as a result it has “indicated to the DWP our desire to change the legislation to allow compensation costs to be charged to the assets of the PPF”.
However, the report claims outsourcing the compensation service will mean the PPF can “leverage scale economies” and benefit from a lower cost of administering compensation and assessment, which means although total costs are expected to rise, the cost per member should fall over time.
As part of this process, the PPF outlines its current outsourcing contracts which include BT providing a managed information technology service until 31 March 2008, while “substantial work” has been completed to integrate the PPF’s processes with Capita, after the firm was appointed as the body’s compensation payment provider in 2006.
Figures from the report also show since it was established the organisation has received 6,763 qualifying insolvency notices, although it confirms only 395 will have entered assessment by 2010 as the “overwhelming majority” of notices involve defined contribution, stakeholder or personal pension schemes.
In its plan the PPF outlines its strategic objectives and has identified the following priorities for the year ahead including:
- Transferring schemes efficiently through the assessment period into compensation
- An enhanced programme of communications for pension scheme members
- Providing stability to levy payers on the pension protection levy,
- Implementation of the Pension Protection Fund’s liability-driven investment strategy.
Partha Dasgupta, chief executive of the PPF, says the Management Plan provides clarity to stakeholders on the PPF’s direction and thinking on key issues as he takes the PPF forward into its third year and beyond.
He adds: “We remain committed to providing security for the pension system. We will continue to work with our stakeholders to encourage risk reduction to minimise the number and size of claims made on us. We’ll also be improving the way we work with scheme trustees to ensure scheme members get the best possible protection.”
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