The Pension Protection Fund (PPF) has launched its long-term risk model, a bespoke system that will enable the fund to calculate future risks.
The model will help the PPF set a stable risk-based levy year-on-year, ensuring people continue to receive the compensation they are entitled to.
PPF based the model on methods commonly used by insurance companies to estimate what assets and liabilities they have and assess how solvent they are.
The PPF has adapted the method to predict the level of risk it would face in various economic conditions. The PPF can use the model to calculate what might happen in the event of a major stock market crash, for example.
Partha Dasgupta, chief executive of Pension Protection Fund, says: “Levy payers will have a better idea what to expect while compensation recipients will be reassured their payments are coming from a stable and trusted source.”
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