Financial risks and the Pension Protection Fund : can it survive them?

This paper discusses the financial risks faced by the UK Pension Protection Fund
(PPF) and what, if anything, it can do about them. It draws lessons from the
regulatory regimes under which other financial institutions, such as banks and
insurance companies, operate and asks why pension funds are treated differently. It
also reviews the experience with other government-sponsored insurance schemes,
such as the US Pension Benefit Guaranty Corporation, upon which the PPF is
modelled. We conclude that the PPF will live under the permanent risk of insolvency
as a consequence of the moral hazard, adverse selection, and, especially, systemic
risks that it faces.