Liability-Driven Investing – Page 2
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Country ReportMercer’s upbeat vision for UK pension funds and their investment advisers
James Lewis, UK CIO at Mercer, is optimistic about the future of the UK’s DB and DC industries
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NewsEnpam shifts to macro portfolio strategies in new LDI approach
Italy’s largest pension scheme is splitting its assets into two macro portfolios
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NewsGrant Thornton Pensions Fund appoints Cardano as fiduciary manager
Cardano will provide services including investment advice, investment management, and risk management for the £250m scheme
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Special ReportManager selection: Solving the pension liquidity puzzle
Advisers and fiduciary managers are working as hard as ever to meet the liquidity needs of pension funds
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InterviewsAhold Delhaize pension fund on climate transition and system change
Eric Huizing, chief investment officer at Ahold Delhaize Pensioen, explains to Tjibbe Hoekstra how the pension fund is progressing not only with its climate-focused investments but also the change in the Dutch pension system
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Opinion PiecesCambridge and Westminster: a tale of two pension schemes
The Houses of Parliament and Cambridge University are two venerable British institutions. But the differences in how they run their pension arrangements illustrate the contrast between the UK-style pooled liability-driven investment (LDI) and a more traditional form of pension investing, no longer as popular in the UK but still common elsewhere.
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FeaturesBritain’s LDI crisis: When things nearly fell apart
On 23 September 2022, Kwasi Kwarteng, the then UK chancellor of the exchequer, announced a £45bn (€52bn) package of tax cuts. The hand-outs, designed to please key voters, were the wrong gift at the wrong time. For several years, the Bank of England had been attempting to end quantitative easing and start putting a higher price on borrowing.
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NewsEIOPA says national supervisors need more data on liquidity risks
European pension funds, insurers holding up well despite higher stability risks, says latest risk report from EU pension and insurance watchdog
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NewsUK’s pensions regulator to gather feedback on LDI guidance
The Regulator placed ‘huge emphasis’ on operational processes
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Opinion PiecesViewpoint: Differentiation – the future of professional pension trusteeship
When purchasing professional services, choice is good. Differentiated choice is even better.
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NewsItaly roundup: Enpam plans to build up global bond portfolio
Plus: Write downs hit Enasarco; Laborfonds sees sign of return to normality
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Opinion PiecesLDI lessons: be wary of future traps
After the global financial crisis of 2008-09, world leaders meeting at the Pittsburgh G20 summit mandated central clearing for derivatives. This was to allow for greater supervisory oversight and to mitigate against the unintended build-up of risks of the kind that almost toppled the financial system in the guise of over-the-counter credit default swaps.
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Country ReportUK: A review of the LDI debacle
The UK Parliamentary inquiry into the LDI crisis has shed light on its causes, but the debate over the lessons learned for the UK DB industry is far from over
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Opinion PiecesBlame will not solve the issues raised by the LDI crisis
The chain of events that led to the UK’s liability-driven investment (LDI) crisis, a high-profile inquiry by the UK Parliament, and a time of anxiety and introspection in the country’s pension industry, started well before then prime minister Liz Truss’s government and its somewhat reckless ‘growth plan’.
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Country ReportUK: to barbell or not to barbell?
In the new world of lower LDI leverage, trustees must choose between maintaining hedging or diversification
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Country ReportCountry Report – Pensions in UK (May 2023)
UK pensions are at a crucial juncture. The UK Parliament’s inquiry into the LDI crisis of September 2022 shed some light on its causes, but the debate on the role of LDI is alive and well. Meanwhile, regulators including The Pensions Regulator and the Financial Conduct Authority have advised pension schemes on how to make LDI strategies more resilient to shocks.
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NewsUK’s pensions regulator, FCA set out new LDI guidance
Trustees must understand investment strategy risks, and only use leveraged LDI if appropriate, says TPR
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NewsUK parliamentarians call for greater accountability of regulators
RRG recommends forming a new cross-parliamentary committee to oversee the performance of regulators
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Opinion PiecesGuest viewpoint: LDI regulation should not ignore private asset solutions
In the aftermath of the liability-driven investing (LDI) crisis, The Pensions Regulator (TPR) in the UK drew up guidelines for pension funds to improve the resilience of LDI strategies. These guidelines primarily aim to support the creation of liquidity buffers so that pension funds can withstand yield shocks. To that end, the guidelines advise pension funds to conduct stress tests and identify suitable collateral with respect to both leveraged and unleveraged LDI strategies using yield-shock scenarios.
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NewsBank of England tips Pensions Regulator to keep LDI buffers wide
UK central bank advises DB pension funds keep minimum of 250 basis points buffer liquidity – but more on top of that
