UK pensions implosion could end with a deals boom
There is nothing like a good crisis to reignite an argument that everyone has been having for 20 years.
The pandemonium unleashed by the UK “mini” Budget, which prompted a scramble for collateral by pension schemes to meet margin calls on so-called liability-driven investment strategies, has lit a fire under an old barney about how much risk these schemes should take.
The debate dates back to the 1990s when policy and accounting changes vastly increased the cost and complexity of managing defined benefit pension schemes. Funds closed to new members. A push — from shareholders in the companies backing the schemes and regulators — to reduce risk led to a shift out of equities and into fixed income, particularly government bonds.
This story originally appeared on: Financial Times - Author:Helen Thomas
