UK pensions remain wary of long-duration LDI workaround

Trustees worry managers are swapping one risk for another to maintain hedges in wake of gilt crisis

UK pensions typically use liability-driven investment strategies to hedge against changes in interest rates, and following last year’s gilt crisis, LDI managers have been requiring retirement schemes to post more collateral than ever before.

The schemes’ trustees are now wary that the fiduciary managers responsible for managing their assets are turning to increasingly risky strategies.

Rather than investing in several LDI funds to match the duration of a scheme’s liabilities, fiduciaries are