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Pension Protection Fund to increase funding

The Pension Protection Fund, the rescue authority which covers corporate pension failures, has announced plans to increase its liquidity and its asset backing in the medium to longer term. The authority will increase its solvency ratio, the amount of assets available compared to the amount of liabilities taken on, from 88% in March 2009 to 110% over next 20 years.

The Pension Protection Fund is becoming more in demand as pension funds continue to fall by the wayside as companies struggle to survive. The Pension Protection Fund makes its money by taking over the assets of struggling pension schemes, which it has agreed to bail out, and charging a levy against all corporate pension schemes which come under its remit.

The increasingly solvency ratio will not only take into account than expected increase in pension failures in the short to medium term but also the extended life expectancy of pension scheme members in the UK. Life expectancy is one issue which has caused major problems for the UK pension arena with previous calculations based upon inaccurate life expectancy rates which have totally changed the basis of the pension fund industry.

Corporate pension scheme members will also be relieved to find increased backing for the Pension Protection Fund.

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