Season 4 Episode 4:
Gilts, LDI, DB pensions and what’s next
Our viewpoint
27 October 2022
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This week we’re revisiting one of the key market issues of the moment: DB pensions and LDI.
First, we’re joined by LCP partner Steve Hodder where we discuss some of the actions being taken by pension funds, frameworks for helping clients approach the decisions, a reminder of the core reasons behind LDI and its continued popularity, how the market for LDI is changing and the role of leverage in investing.
We are then joined by independent trustee Keith Scott for his perspective as a fund manager-turned-trustee reflecting on recent events, the role of LDI in the future, the challenges being navigated by managers and what he would like to see from managers going forward.
If you’re interested in how one of the biggest market stories of recent years is evolving, this is a must-listen.
Links mentioned:
- Upcoming LCP webinar: The new economic reality and what it means for pensions
- Dan’s blog in the FT
- LCP's CEO, Aaron Punwani’s article in Professional Pensions
- Our previous episode in June 2022 with Steve discussing DB pensions
We discuss:
- Key actions that have been taken by DB pension funds in recent weeks
- Helpful principles/framing that have been helpful to guide decision making at this time
- What’s been missing from the broader discussion that’s important?
- How communications have worked with other stakeholders (trustees, company)?
- The big picture – are schemes well funded? How does this fit into or change longer-term journey plans?
- Use of LDI in the future, more/less demand? How it is changing LDI structures, liquidity and collateral?
- Is leverage in investment strategies a good or bad thing?
- What we would like to see from managers going forward and how LDI might change in the future
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