After five years as chief executive officer of the Pension Protection Fund (PPF), Oliver Morley leaves the lifeboat fund in December to lead the Money and Pensions Service (MaPS).

Launched in 2005, the PPF was set up by the UK government in response to a series of high-profile cases in which defined benefit (DB) pension schemes had wound up with insufficient assets to meet their pension commitments. It now manages £33bn (€39bn) of assets for 295,000 members.

During his tenure at the PPF, Morley witnessed the industry experience multiple unprecedented challenges such as COVID-19 and the liability-driven investment crisis.

He says: “These probably have been the most challenging five years that you would see, certainly over the past 20 years.”

However, Morley is convinced that the PPF is set on a “very good path” even during “turbulent times”.

He highlights that the fund’s reserves have more than doubled, from £5bn to £12bn. He attributes this in particular to the skill and experience of the investment team as well as the quality of governance, which he says is “somewhat underestimated in the financial world”.

Another highlight for Morley has been what he describes as “really significant strides” in equality, diversity and inclusion at the PPF. He acknowledges the gender pay gap and says the PPF does not have enough people from minorities across its senior management.

But he adds: “If you look at our board now and our executive team and compare it with where we were five years ago, it’s transformed.”

Levy consultation

Earlier this year the PPF launched a consultation on lowering the levy that is applied to DB schemes across the UK. Morley highlights that since he joined the fund the levy has decreased from £600m to £100m – a level that has been consulted on over the last few months.

When the consultation launched, Steve Webb, partner at consultancy LCP, said that it is “clear” that the PPF would like to reduce the levy further, but it is “constrained by law”.

However, while Morley agrees that the PPF could benefit from legislation that would allow it more flexibility on the levy it charges, it is not “urgent”, and it is still “legitimate” for the lifeboat to raise the levy given the possibility of claims in the future.

Morley highlights that there have been some substantial claims over the recent years including Carillion Rail in January 2020 and Wilkinson in August 2023.

The Carillion case was “particularly interesting”, according to Morley, as it was an example of people “telling us that no claim would happen and that the levy was too high”.

He adds that while the claims are lower, there is still a possibility of large claims, with some of the schemes covered by the PPF being “very very large”.

Public consolidator

The PPF was thrown into the limelight earlier this year with two separate proposals to use the fund as a public-sector consolidator.

In May, the Tony Blair Institute for Global Change published a report that set out the future of DB schemes in the UK, suggesting that the PPF be turned into a superfund to boost investments into the UK economy.

Separately, the UK Treasury suggested that “struggling” DB schemes could choose to opt in to the PPF, which would likely provide full benefits to members of those schemes and potentially release sponsoring employers that were otherwise struggling to support those schemes.

According to Morley, there are a variety of different futures for the PPF “depending on some of the outcomes and discussions that are going to be coming up more widely”. A government consultation on the PPF as a public sector consolidator is taking place this winter.

Since the Mansion House reforms in July, Morley has been clear that the PPF has a potential to be a public consolidator of smaller DB schemes.

Morley says: “Our experience is on managing and migrating schemes into the PPF providing exceptionally high standards of service and managing assets that come with them.

“We have done that at scale with over 1,000 schemes that [have] come into us and we therefore have experience with exactly what it is a public consolidator would have to do.”

Morley adds that there are “very few” other organisations that are out there “and none really that have that experience”.

He adds that there are still questions around how it would be done but he believes that from “pure operational capability” PPF is “absolutely ready to do a public consolidator role at different scales”.

There has been some scepticism from the industry over whether the PPF would actually be able to handle the role, with WTW calculating that it would take the fund 18 years to consolidate 4,500 smaller DB schemes.

However, Morley says that the fund is prepared to “scale up” and has scaled up in the past as it has “dealt with a variety of different levels in terms of volume”.

He says: “The 18-year calculation is entirely based on a two-year total assessment period which we consistently said is the maximum and we’re almost always below that.”

New challenge

Morley says the PPF now has the capability, capacity, people and reputation that it needs to ensure that it is in a position to contribute to public policy objectives.

“This is one of the reasons I’m moving on to a new challenge,” he says. “I fundamentally believe that the PPF is in that position now and it’s a really good time for someone to come in and take that on.”

He adds that the future of the fund ultimately depends on what the government decides but without “that change in the last five years, we simply wouldn’t be having this conversation”.

Speaking about his own future, Morley says that at MaPS, which he will be joining in January, working to develop the pensions dashboard.

He adds that MaPS will provide an “interesting challenge” of highlighting the importance of financial futures to people.

He says: “I’m very keen that MaPS, as much as the PPF is, just has to be a really fundamental part of the overall system in terms of making sure that people are properly supported financially.

“It’s going to be an exciting but different kind of continuation of what I’ve been trying to do for the past five years.”

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