Insolvency risk - the PPF's "Purple Book"
The Pensions Regulator ("TPR") and the Pension Protection Fund ("PPF") issued The Purple Book in November 2006, revealing, in addition to much wider pension risk issues, the PPF's perspective of insolvency risk, largely on the basis of Dun & Bradstreet's methodology and data.
Key relevant messages include:
- insolvency risk is higher in companies with poorly funded or small pension schemes or in traditional industries;
- 0.7% of active companies go into insolvent liquidation each year, but the risk of insolvency is dramatically higher for the 5% of companies with the lowest Dun & Bradstreet failure score (ie those scoring 1 - 5).
[...] We looked at The Purple Book, the Pensions Regulatorķs (īTPRī) and the Pension Protection Fundķs (īPPFī) view of pensions and insolvency risk, in an earlier post. Further analysis reveals a strikingly high risk of insolvency for the sponsors of a number of schemes. [...]