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Pensions and insolvency risk - the Purple Book revisited

We looked at The Purple Book, the Pensions Regulator's ("TPR") and the Pension Protection Fund's ("PPF") view of pensions and insolvency risk, in an earlier post. Further analysis reveals a strikingly high risk of insolvency for the sponsors of a number of schemes.

Of the defined benefit schemes examined by TPR and the PPF at 31 March 2006, the 82 schemes (1.4%) whose sponsors are most likely to become insolvent within 12 months have an average insolvency probability of 35.7%.

24 of those companies can be expected to have failed already and 5 more are expected to fail in the next two months.

75 of those 82 schemes are underfunded and they represent 41% of the combined insolvency and underfunding risk identified amongst underfunded schemes. They have an average insolvency probability of 37% and combined risk of

 

 

Date: 26th January, 2007
Author: Chris Laughton

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