Liability-Driven Investing – Page 2
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Opinion Pieces
LDI 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 Report
UK: 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 Pieces
Blame 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 Report
UK: 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 Report
Country 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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News
UK’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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News
UK 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 Pieces
Guest 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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News
Bank 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
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News
Global pension assets down 16.7% in 2022
UK pension funds suffered the greatest losses due to their forced selling of Gilts during the liquidity crisis last autumn
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News
Cut LDI gearing, introduce liquidity buffers, says UK parliamentary panel chair
After scrutinising last autumn’s LDI crisis, House of Lords’ Industry and Regulators Committee makes recommendations for reform to UK government
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News
UK trustees urged to actively consider impact of Gilts crisis
XPS launched an LDI Oversight Service to help trustees review their LDI arrangements
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Country Report
Ireland: Taking stock of LDI
While there are no immediate concerns, liability-matching assets fell significantly last year following rising euro yields
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Country Report
Ireland: Interview – Pensions Authority keeps an eye on LDI practices
Pensions Authority CEO Brendan Kennedy is not overly concerned about DB schemes’ LDI position, but feels the regulator needs more information. He speaks to Gail Moss about this and other issues facing the Irish industry
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Special Report
UK pension risk transfer market set for bumper 2023
Improved pricing and funding levels turned 2022 into a busy year for insurers, with more demand expected in 2023. But can they cope with the higher demand and will pricing remain competitive?
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Features
PensionsEurope: Not all doom and gloom for 2022
After the bumper investment returns of 2021 – the best that many pension funds had ever experienced – last year’s results were disappointing.
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News
Bank of England calls for coordinated LDI regulation in UK and abroad
Financial Policy Committee advises regulatory action from TPR, FCA and overseas regulators, ‘to ensure LDI funds remain resilient to the higher level of interest rates’
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Opinion Pieces
Viewpoint: Gilts crisis won’t undermine attractions of private markets for long-term investors
Many of the government’s ambitions to reboot growth in the UK economy require solutions which private assets are well equipped and prepared to provide in a timely manner
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News
UK roundup: Border to Coast reappoints Robeco for voting and engagement support
Plus: FTSE 350 pension scheme funding stabilises following Gilt market turmoil; Coats UK scheme completes buy-in with Aviva
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News
Actuaries association chair calls for renewed focus on systemic risks
There is currently little system-wide information on the use by individual schemes of LDI strategies