More than a decade after our creation we remain confident of our financial position. In our last published annual report and accounts, we had £3.6bn in reserves, a 115.1 per cent funding ratio, more than £22bn of assets and responsibility for more than 220,000 members.

Our funding objective ... is to become financially self-sufficient by having a prudent funding margin

We have a clear understanding of what our potential liabilities may be, and this informs our funding strategy and in turn the financial decisions we make.

Each year we update the funding strategy with the most up-to-date financial information, taking into account current and future risks.

Through this process, we review the progress we have made towards our funding objective, which is to become financially self-sufficient by having a prudent funding margin for the risks we are exposed to at our funding horizon. 

A key element to this is our long-term risk model, which estimates our probability of achieving this funding objective by running through a million different scenarios.

Challenging times

The current environment is particularly challenging with the UK’s vote to leave the EU having a significant impact on financial markets.

We are also mindful that the defined benefit landscape faces a period of uncertainty, with five out of six schemes in deficit.

While we cannot predict whether and when a scheme will come to us, our long-term approach assumes we will see some very large schemes come to us from time to time.

Our healthy financial position ensures we are strong enough to meet the challenges of a large insolvency and provide the security that the 11m members of DB schemes deserve.

While our balance sheet is healthy, we need to remain vigilant about the risks that the universe of DB schemes present to us.

We continue to monitor this through our 7800 index, which tracks scheme underfunding, and regular stress testing to ensure our funding strategy remains fit for purpose now and in the future. 

Hans den Boer is the chief risk officer of the Pension Protection Fund