01 Pension Protection Fund Climate Change Report 2021/22 About the PPF: Protecting people’s How we are funded How we are invested When an employer becomes insolvent and its pension We hold £39 billion in our investment portfolio (31 March scheme cannot a昀昀ord to pay the pensions promised, 2022). This amount is managed in a broadly 50/50 split by futures we compensate scheme members for the pensions internal and external investment teams. We invest across they have lost. We raise the money we need to pay PPF both public and private markets, seeking to capture both bene昀椀ts and the cost of running the PPF in four ways: capital growth and reliable income generation to meet pension commitments. Our purpose is to protect the future of millions Split of funding sources Split of asset allocation of people throughout the UK who belong to Assets from pension Equity 11.2% 42.1% schemes transferred de昀椀ned bene昀椀t (DB) pension schemes. to us Global credit Should a scheme fail, we’re ready to help. 22.7% The return we make EMD on our investments Absolute return The levy we charge Cash We do this by charging a levy, investing on eligible pension schemes Alt credit sustainably and paying our members. Recovered assets Private equity 24.0% we secure from Infrastructure insolvent employers Our work has a real impact on people’s lives. Property Timberland & Farmland So whatever we do, we strive to do it well, Hybrid assets with integrity and members’ futures in mind. Gilts The PPF in numbers as at 31 March 2022 9.7 million 5,000+ 295,000 £39 billion The PPF portfolio is currently managed members of schemes DB pension schemes PPF members of assets under to achieve two long-term objectives: we protect protected currently receiving management • Grow assets at cash + 1.5 per cent annualised over the long term bene昀椀ts • Allocate a risk budget to assets in our investment universe as e昀케ciently as possible, while ensuring that the interest rate and in昀氀ation risks within our liabilities are fully hedged through our Liability Driven Investment (LDI) strategy.