The shortfall in company pension schemes run by the government-created lifeboat for the retirement industry more than doubled to £1.2 billion last year, renewing fears that it will have to increase its fees to stay viable.

According to its annual report, published today, the Pension Protection Fund (PPF) took on 63 company schemes during the 12 months to the end of March, taking its total to 104 schemes.

These included pension rescues after high-profile collapses at Woolworths, the retailer; Nortel Networks, the telecoms group, and Lehman Brothers, the Wall Street bank.

The surge in schemes tapping the PPF meant that the fund’s deficit ballooned from £517 million in March 2008.

The PPF was created in 2005 to step in when companies can no longer meet their pension obligations. It funds pensions through an annual levy, currently £700 million, charged to about 7,300 eligible schemes.

Pensions experts predicted that the PPF, which has launched a review of its levy system but promised to hold it flat for 12 months, would be forced to increase rates to meet its long-term pension payments.

Tom McPhail, head of pensions research at Hargreaves Lansdown, said: “Every time a company shuts a pension scheme, the PPF loses a subscriber. Unless the PPF can reduce that deficit quickly, final salary schemes will have to pay higher levies or the fund might have to consider reducing pension guarantees to members.”

Joanne Segars, chief executive of the National Association of Pension Funds, said that schemes needed reassurance that charges in the future would be “predictable, fair and affordable over the long term”.

Alan Rubinstein, the former Lehman banker who is the PPF’s chief executive, said: “We are not worried; we are stronger than most pension schemes. We are sitting on assets of about £3 billion and we pay out £6 million a month.”

Mr Rubinstein said that, as at the end of September, the deficit had fallen below £1 billion, while the PPF had generated a 13.4 per cent return on its investments, mainly in bonds. He said there would be an update on the levy next year.

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