Issues with workplace pension schemes have caused protests
The effect of the financial crisis on claims to the UK Pension Protection Fund (PPF) has been revealed in its annual report.
By the end of March, the safety net was paying compensation to 12,723 people whose workplace pension was affected by businesses going bust.
This was up from 3,596 members a year earlier, the report showed.
As a result, the PPF's deficit increased from £517m to £1.2bn over the same period.
However, this was expected to have fallen back below £1bn since then owing to a lack of major claims and improving economic conditions.
The Fund was set up in April 2005 to pay compensation to workers when an employer went under and there was insufficient assets in the pension scheme to cover this compensation.
The economic downturn put a strain on the finances across the world, including the pension sector.
As a result, around 63 pension schemes were accepted into the PPF during the 12 months to April, the highest number since the scheme was first set up in 2004. A further 342 pension schemes are going through the PPF's assessment period.
As well as people already being paid compensation, another 18,009 will be paid when they come to retirement. This deferred entitlement figure was up from 8,577 at the end of March 2008.
The PPF is funded by charging a levy to existing pension funds.
"We expected that this year's claims would be larger than our levy so we were not surprised by these figures which have been impacted by market volatility and low interest rates," said PPF chairman Lawrence Churchill.
However, in his foreward, the chairman said that the PPF remained confident that it could continue to pay compensation to people affected.
"On dire assumptions, hypothesising an economic downturn much worse than even 2008/09, and lasting long into the future, then we have enough assets for more than two decades - thereby giving us, government, the Pensions Regulator, employers and trustees more than ample time to formulate policy responses if these dire circumstances prevail," he said.
"The economic downturn has highlighted how vital PPF protection has been. None of us would want to go back to an era where people lost their pension as well as their jobs."
Alan Rubenstein, PPF chief executive, said that the fund had built up a investment portfolio itself of £2.9bn by the end of March, up from £1.47bn.
"Our priority remains to maximise returns on our investments but without taking undue risk to make sure we continue to fulfil our obligations to our members," he said.
The levy charged by the PPF to pension funds is being held at its current level in 2010-11, but the cost in subsequent years is unclear, according to Joanne Segars, chief executive of the National Association of Pension Funds.
"Our members are looking for reassurance about the likely approach in subsequent years and the continuing cost of the PPF levy. The long-term review on the future of the levy announced in July must ensure that the levy is predictable, fair and affordable over the long term," she said.