I have missed David Robbins of WTW of late. That’s because I haven’t been much on Twitter following his threads as I used to. I was investigating twitter to find views on use of the PPF last week – mainly because I want “DC pensions” to happen and wonder if there is a place for the PPF to provide a backstop for income that lasts as long as DC savers do!

To my ignorance, I discovered that David had been following a debate on the use of the PPR in parliament

Yesterday’s Select Committee exchange on @ppf gave a confusing impression on three issues:
1. Who should the the PPF’s reserves belong to?
The Committee chair, @Debbie_abrahams said, regarding compensation recipients with pre-1997 accrual: “it is their savings – their investment… pic.twitter.com/7q848Ifwen

— David Robbins (@David_J_Robbins) July 17, 2025

In case you have problems with the link from Twitter – here is what David went on to say. The most pertinent bits (to me) I’ve emboldened

1. Who should the the PPF’s reserves belong to? 

Debbie Abrahams said, regarding compensation recipients with pre-1997 accrual:

“it is their savings – their investment in the scheme – that has contributed to the PPF reserves”

and

“in terms of the the levy that has gone into the PPF, it is their money”.

This justification for reserves belonging to beneficiaries is mostly wrong.

Schemes only enter the PPF where their assets are insufficient to secure equivalent benefits elsewhere. Taking on schemes subtracts from the PPF’s reserves rather than adding to them, with levies paid prior to insolvency seldom making up much of the difference.

Generally, speaking, it is schemes that paid levies and did not enter the PPF that have contributed to the reserves. Sometimes, investment outperformance derived from assets transferred to the PPF will have outweighed the initial hit.

In this sense, it could be argued that reserves are partly beneficiaries’ money.

But the PPF may not have been able to pursue that investment strategy without the backstop of being able to charge higher levies. None of that is to say that beneficiaries have no case: inflation has eroded their compensation more than would have been expected and they had to shoulder the risk that compensation might one day be cut (another safety value facilitating the PPF’s investment success).

But if the criterion is contribution to the PPF’s reserves, you can’t ignore the levy payers who never made a claim. It would have been better if a strategy for the very-much-anticipated surplus had been set years ago, as some of us argued at the time.

There sometimes seemed to be an almost superstitious view that planning for an expected but not guaranteed happy outcome would curse things.

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2. The PPF’s presence on the public sector balance sheet

The PPF was first included in Whole of Government Accounts for 2014/15 (published 2016) and was included in some national accounts aggregates later, I think in 2019. As the permanent secretary told the Committee, the recent change (October 2024) is that the Chancellor’s debt rule is now based on PSNFL, which includes PPF liabilities and most of its assets. But an immediate decision to use part of the reserve for one purpose or another would not affect the projected year-on-year change in PSNFL in the year which matters for the fiscal rule 

 The concern might be more about whether the reserves ultimately flow to the Exchequer.

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3. Cost of improving compensation

The £133m over 10 years quoted by the chair relates to the separate taxpayer-funded Financial Assistance Scheme (covering insolvencies before the PPF was up and running), not the PPF. The PPF letter she cited estimated that providing increases of CPI capped at 2.5% on pre-97 compensation going forward would reduce its reserves by £2.2bn (or £1.7bn if only awarded where the original scheme would have provide them).

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I have been told by the DWP that the Treasury objects to claims against the PPF (the assumption being that surplus should go back to the Treasury). We had hoped to see the PPF paying increases to those in pre 97 DB schemes (see David’s last paragraph). We have not seen it.

I would like to see DC schemes (I suggest Nest as the first) becoming true DC pensions. I do not mean a cobbled together “grow and fix” arrangement where drawdown leads to purchasing an annuity”.

If a proper DC pension is set up, the pension looks and is paid like a DB pension – it pays to the last breath and if it fails, it fails like a DB scheme. That is of course, that DB pensions have the insurance of the PPF. I do not know whether Nest’s pension will be backed by the PPF but I am quite sure that the PPF will not want that to happen.

So whatever the DC pension is, it will not have the PPF standing behind it. Having read David’s explanation I can see that ownership of the PPF surplus is very disputed and with DC members, employers and commercial providers not paying a PPF levy, I can see why the PPF might not be part of the DC pension deal.

I’m still none the wiser who will end up with the multi-billion pound surplus owned at this moment by the PPF!