"Small number" of UK pensions worse off after LDI crisis - regulator
LONDON (Reuters) -A "small number" of UK defined benefit pensions schemes will have seen their funding levels worsen after a recent gilt market crisis triggered by liability-driven investments (LDI), the chief executive of The Pensions Regulator said on Wednesday.
"The majority of schemes are in a better place", Charles Counsell told a parliamentary pensions committee, adding that for a "small number of schemes...their funding levels will have worsened".
UK government bond yields spiralled after defined benefit, or final salary pension schemes faced a dash for cash to meet margin calls on LDI derivatives positions in late September, forcing the Bank of England to step in to stabilise the market.
Most pension schemes suffered a liquidity crisis but their long-term solvency has improved, as higher interest rates mean they need to set aside less money now for future pension payments.
Some schemes lost out on hedging positions in the stampede, however, which meant their solvency levels deteriorated when yields fell again.
(Reporting by Carolyn Cohn; Editing by Jon Boyle and Janet Lawrence)
