Liability-Driven Investing – Page 2
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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
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NewsGlobal 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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NewsCut 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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NewsUK 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 ReportIreland: 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 ReportIreland: 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 ReportUK 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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FeaturesPensionsEurope: 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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NewsBank 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 PiecesViewpoint: 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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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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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
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Fiduciary managers face challenges as growth slows and AUM falls
Total fiduciary management AUM decreased 5% to £218bn in 2022, largely as result of a rise in yields driving declines in Gilts and LDI portfolios
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UK pensions regulator issues LDI guidance
TPR is also calling on pension fund trustees investing in leveraged LDI to improve their schemes’ operational governance
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FeaturesUK fiduciary managers wrangle with LDI fallout
UK Gilt yields rose throughout 2022, even before September’s well-publicised spike caused by the unfunded mini budget. Fears of global inflation, exacerbated by the energy crisis and geopolitical uncertainty following Russia’s invasion of Ukraine, took UK 10-year yields from around 1% in January to 3% in mid-September.
