The Purple Book - DB Pensions Universe Risk Profile 2011
This is the sixth edition of the Pensions Universe Risk Profile (The Purple Book), a joint annual publication by the Pension Protection Fund (the PPF) and the Pensions Regulator (the regulator) which focuses on the risks faced by defined benefit (DB) pension schemes, predominantly in the private sector.
The main focus in each year’s Purple Book is the position at the end of March for the year in question, and a comparison of how risks have changed over the previous year. The economic and financial market environment improved a little over the 12 months to March 2011, although since then there has been a marked deterioration:
• UK GDP growth picked up to 1.6 per cent year-on-year by the first quarter of 2011.
• The FTSE all-share index rose by 5 per cent after a 47 per cent increase between March
2009 and March 2010.
• Insolvency Service statistics showed that the number of company liquidations
rose a little in the year to Q1 2011 but other company insolvencies (receiverships,
administrations, and company voluntary arrangements) fell a little.
• Meanwhile, 10-year gilt yields declined to 3.7 per cent from 3.9 per cent while 10-year
AA corporate bond yields were unchanged at 4.9 per cent.
• The Bank of England kept its policy rate and Quantitative Easing unchanged at 0.5 per
cent and £200 billion respectively.