The derivatives-based investment strategy that has plunged the UK pension sector into crisis begins with good purpose: Helping companies deliver on the promises they have made to employees to pay a steady income. through retirement.
Behind the push for that strategy, say pension trustees and their advisers, is the Pensions Regulator, the UK’s powerful watchdog responsible for safeguarding savings. of millions of private sector workers. The regulator directs private pension funds through liability-oriented investments, known as LDIs, related to returns on UK government bonds, according to pension consultants and trustees.