The Pensions Regulator

Fourth Purple Book published

Ref: PN10-01
19 January 2010

• Fourth Purple Book published, covering 97 per cent of eligible schemes
• Purple 2009 provides analysis of how schemes fared during recession
• Publication provides important information on trends in DB schemes
• Invaluable in assessing risk to the PPF

In-depth analysis of how the UK's defined benefit pension schemes fared during the economic turbulence experienced in 2008/09 was jointly published today (Tuesday) by the Pension Protection Fund (PPF) and the Pensions Regulator (the regulator).

The Purple Book 2009 – the fourth to be published – uses information relating to 97 per cent of the defined benefit schemes eligible for PPF compensation (6,885 schemes, representing some 12 million defined benefit pensions ) and 99 per cent of their estimated total liabilities.

Much of the analysis in the Purple Book 2009 is based on new information contained in the returns which schemes provided to the regulator by the end of March 2009. These returns contain details about such things as scheme valuation, asset allocation and membership.

PPF Chief Executive, Alan Rubenstein, said: “This year's Purple Book highlights how the dramatic deterioration in the economic and financial environment during 2008/09, not just for the UK but for most major economies, led to heightened risk for the schemes in the PPF universe.

“The Purple Book continues to provide important information on trends in defined benefit pension schemes illustrating the risk these schemes pose to the PPF, in terms of underfunding levels and the likelihood of claims on us.”

The regulator's Chief Executive, Tony Hobman, added: “The latest Purple Book provides an insight into the risks faced by UK defined benefit schemes and gives some insight into the effects of a stormy economic climate.

"The data reflects the situation faced by schemes up to March 2009. While there has since been an upturn in the financial markets, we remain alive to the risks and continue to work with schemes on their recovery plans. We work closely with the PPF to monitor the risks.”

Highlights of The Purple Book 2009 are included in the Executive Summary and copies of the full document can be found on the PPF website at www.pensionprotectionfund.org.uk or on the regulator's site at www.thepensionsregulator.gov.uk.

Editor's notes

1. The Pensions Regulator is the regulator of work-based pension schemes in the UK, with objectives to protect members' benefits, promote good administration and reduce the risk of calls on the Pension Protection Fund. Our approach is risk-based focusing on education and enablement, with enforcement where appropriate. We have the ability to:
   • collect information about pension schemes; through scheme returns, under the scheme funding regime and as well as statutory (including whistleblowing)
   • issue notices requiring actions to tackle non-compliance, prohibit trustees who are judged not fit and proper to carry out their duties or appoint independent trustees;
   • direct pension schemes as to how to calculate their liabilities and the contributions required;
   • issue a contribution notice where there is an attempt to avoid liabilities, or a financial support direction where the employer is a service company or insufficiently resourced.
2. The Pension Protection Fund was set up under the provisions of the Pensions Act 2004 in April 2005 and is classified as a public financial corporation. It has been established to pay compensation to members of eligible defined benefit and hybrid pension schemes when there has been a qualifying insolvency event in relation to the employer, and where there are insufficient assets in the pension scheme to cover Pension Protection Fund levels of compensation.