Financial risks and the Pension Protection Fund: Can it survive them?

Abstract

This paper discusses the financial risks faced by the UK Pension Protection Fund (PPF) and what, if anything, it can do about them. It draws lessons from the regulatory regimes under which other financial institutions, such as banks and insurance companies, operate and asks why pension funds are treated differently. It also reviews the experience with other Government-sponsored insurance schemes, such as the US Pension Benefit Guaranty Corporation, upon which the PPF is modelled. We conclude that the PPF will live under the permanent risk of insolvency as a consequence of the moral hazard, adverse selection and, especially, systemic risks that it faces.Pensions (2007) 12, 109–130. doi:10.1057/palgrave.pm.5950054 [ABSTRACT FROM AUTHOR], Copyright of Pensions: An International Journal is the property of Palgrave Macmillan Ltd. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users m)