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Improved resilience of liability-driven investment funds

Ref: PN24-13

Issued: Wednesday 27 March 2024

The Pensions Regulator (TPR) has welcomed a report by a Bank of England committee recognising progress in improving resilience of liability-driven investment funds (LDI).

The Financial Policy Committee’s (FPC) Financial Policy Summary and Record published today (Wednesday), includes an update on the resilience of LDI following volatility seen in September 2022 when the market witnessed widespread selling of gilts by schemes’ LDI arrangements.

Nausicaa Delfas, TPR’s Chief Executive, said: “We welcome the FPC’s recent announcement recognising the progress TPR has made in response to its recommendations on making the leveraged LDI market more resilient to gilt market shocks.

“TPR will continue to work with the Bank of England and other regulatory partners  to ensure any risks to financial stability in the pensions sector are reduced”.

Today TPR also published a letter, sent to the Bank of England’s Governor in January ahead of FPC's most recent meeting, which sets out TPR's progress and actions in relation to financial stability.

The FPC’s report also: 

  • welcomes TPR’s progress against FPC recommendations in November 2022 and March 2023
  • recognises TPR’s guidance on steps for trustees to manage leveraged LDI risks
  • highlights continued progress by TPR in implementing the FPC’s recommended resilience standards for LDI funds, which are continuing to function well
  • recognises  TPR’s enhancement of its data collection and capabilities and ongoing collaboration between UK authorities on LDI monitoring
  • notes the government’s acceptance of the FPC’s recommendation that TPR incorporate financial stability considerations in decision making and balances this with its statutory objectives

Notes for editors

  • TPR published guidance setting out practical steps trustees should take to manage risks when using leveraged liability driven investments in April 2023. 
  • TPR is the regulator of workplace trust-based pension schemes in the UK. Our statutory objectives are to:
    • protect members’ benefits 
    • reduce the risk of calls on the Pension Protection Fund
    • promote, and to improve understanding of, the good administration of work-based pension schemes
    • maximise employer compliance with automatic enrolment duties
    • minimise any adverse impact on the sustainable growth of an employer (in relation to the exercise of the regulator’s functions under Part 3 of the Pensions Act 2004 only)

Press contacts

Dan Menhinnitt

Media Officer
01273 349511

Out of hours

This is for journalists only with a media enquiry. The below number will divert to our on call media officer.
01273 648496

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