UK companies face bigger cash calls from pension funds after LDI crunch
Hundreds of UK companies could face demands for larger cash injections from their retirement schemes after cracks formed in pension funds’ hedging strategies during last month’s crisis in the country’s debt markets.
A rapid drop in UK government debt prices after chancellor Kwasi Kwarteng’s announcement of unfunded tax cuts quickly threatened to spiral out of control when certain pension schemes sold gilts to satisfy their so-called liability-driven investing (LDI) strategies.
These programmes have helped pension schemes to manage risks to retirees stemming from shifts in inflation and interest rates for two decades.
This story originally appeared on: Financial Times - Author:Josephine Cumbo
