Chief executive Alan Rubenstein says the PPF experienced both an increase in number and an increase in the value of claims during the year which made a significant contribution to the worsening deficit.
But he says changes to a number of the actuarial assumptions have served to balance this. These changes derive largely from changes in the relationship between swaps and gilts yields.
Hargreaves Lansdown pensions analyst Laith Khalaf says the “troubling” increase will result in higher levies for final salary schemes in future.
He says: “This is a troubling development and one that throws further doubt on the long term sustainability of the scheme.
“Certainly it will mean that final salary schemes will have to pay higher levies in the future when the PPF takes its recession gloves off. Possibly it may prompt a rethink of the compensation on offer to members.
“For what its worth we think the PPF is doing a good job but it is fighting a vertical battle.”
Watson Wyatt head of corporate consulting Rash Bhabra says: “A deficit of £1.23bn will not sink the pensions lifeboat but there could be worse to come.
“The PPF thinks it would only need a fraction of the £700m it raises through levies to cover new claims in an average year. Without further insolvencies, the right economic conditions could see the PPF climb out of a hole quicker than most pension schemes.
“The real question is how much bigger the deficit gets before the recession is out. Schemes which would fall back on the PPF if their employer became insolvent have combined deficits equivalent to 250 years’ levy income.
“If a significant part of that fell into the PPF’s lap it would have a real problem.”