What is pension insolvency insurance, and how does its existence affect valuations?

A pension protection scheme (e.g. the PBGC in the US, the PPF in the UK; many jurisdictions have an equivalent) is an insurer that, if the employer becomes insolvent, takes over occupational direct-commitment pensions.

all companies with direct pension commitments.

varies with the level of insolvencies, typically 0.2–6 per mille of the pension assessment base. In waves of rising insolvencies (2009, 2020) it jumped sharply — in 2009 it spiked to a record of about 14.2‰.

• The pension liability is effectively "state-backed" up to the scheme's ceiling (a capped annual pension, here about $110,000).
• Above the ceiling: senior-manager pensions can take a "haircut" in insolvency cases.
• Scheme contributions are operating costs — their volatility hits the EBITDA margin in crisis years.

transferring obligations to a pension fund or insurer reduces the contribution obligation.