London Daily

Focus on the big picture.
Saturday, Feb 22, 2025

Lawmakers call for Bank of England role in pensions after LDI debacle

Lawmakers call for Bank of England role in pensions after LDI debacle

The Bank of England should help oversee pension schemes, with powers to order other regulators to take action, a committee of lawmakers from Britain's parliament said on Tuesday.
The House of Lords' industry and regulators committee said watchdogs in the liability-driven investment (LDI) sector appear to have been "too slow" to recognise risks, and made a recommendations to UK financial services minister Andrew Griffith on Tuesday.

LDI funds have been used by pension schemes to ensure they can meet payouts to pensioners in the future.

Turmoil in the British government bond market in September triggered by former Prime Minister Liz Truss's radical tax cut plans caused problems for these funds whose oversight is complex.

Pension schemes which appoint LDI funds are managed by The Pensions Regulator, while LDI managers are regulated by the Financial Conduct Authority. The funds are listed in Luxembourg and Dublin according to European Union rules.

The government should consider giving the BoE's Prudential Regulation Authority a role in overseeing pension schemes, the committee said. The BoE's Financial Policy Committee should have powers to direct action by regulators in the pensions sector if they are too slow, it added.

Accounting rules should be reviewed to see if they can take a longer term view of pension investments, the committee said.

EU rules do not permit the use of derivatives in LDI funds, but Britain, now outside the bloc, has applied them in a "permissive" way.

"The government should review whether the use of leverage and derivatives by pension schemes should be more tightly controlled in the future," the committee said.

It backed calls from the FCA that investment consultants, who advise pension scheme trustees on using LDI funds, should be regulated as a "matter of urgency".

The BoE is due next month to set out a framework to improve the resilience of LDI funds.

Ed Wilson, a partner at consultants Isio, said he worried that the backlash against LDI would go too far when it was still a valuable tool for many plans. "LDI in many ways has self-regulated already," Wilson said.
Newsletter

Related Articles

0:00
0:00
Close
UK Prison Officer Sentenced for Inappropriate Conduct with Inmate
Good News: Senate Confirms Kash Patel as FBI Director
Officials from the U.S. and Hungary Engage in Talks on Economic Collaboration and Sanctions Strategy
James Bond Franchise Transitions to Amazon MGM Studios
Technology Giants Ramp Up Lobbying Initiatives Against Strict EU Regulations
Alibaba Exceeds Quarterly Projections Fueled by Growth in Cloud and AI
Tequila Sector Faces Surplus Crisis as Agave Prices Dive Sharply
Residents of Flintshire Mobile Home Park Grapple with Maintenance Issues and Uncertain Future
Ronan Keating Criticizes Irish Justice System Following Fatal Crash Involving His Brother
Gordon Ramsay's Lucky Cat Restaurant Faces Unprecedented Theft
Israeli Family Mourns Loss of Peace Advocate Oded Lifschitz as Body Returned from Gaza
Former UK Defense Chief Calls for Enhanced European Support for Ukraine
Pope Francis Admitted to Hospital in Rome Amid Rising Succession Speculation
Senate Republican Leader Mitch McConnell, at the age of 83, Declares His Retirement.
Whistleblower Reveals Whitehall’s Focus on Kabul Animal Airlift Amid Crisis
Politicians Who Deliberately Lie Could Face Removal from Office in Wales
Scottish Labour Faces Challenges Ahead of 2026 Holyrood Elections
Leftwing Activists Less Likely to Work with Political Rivals, Study Finds
Boris Johnson to Host 'An Evening with Boris Johnson' at Edinburgh's Usher Hall
Planned Change in British Citizenship Rules Faces First Legal Challenge
Northumberland Postal Worker Sentenced for Sexual Assaults During Deliveries
British Journalist Missing in Brazil for 11 Days
Tesco Fixes Website Glitch That Disrupted Online Grocery Orders
Amnesty International Critiques UK's Predictive Policing Practices
Burglar Jailed After Falling into Home-Made Trap in Blyth
Sellafield Nuclear Site Exits Special Measures for Physical Security Amid Ongoing Cybersecurity Concerns
Avian Influenza Impact on Seals in Norfolk: Four Deaths Confirmed
First Arrest Under Scotland's Abortion Clinic Buffer Zone Law Amidst International Controversy
Meghan Markle Rebrands Lifestyle Venture as 'As Ever' Ahead of Netflix Series Launch
Inter-Island Ferry Services Between Guernsey and Jersey Set to Expand
Significant Proportion of Cancer Patients in England and Wales Not Receiving Recommended Treatments
Final Consultation Launched for Vyrnwy Frankton Power Line Project
Drug Misuse Deaths in Scotland Rise by 12% in 2023
Failed £100 Million Cocaine Smuggling Operation in the Scottish Highlands
Central Cee Equals MOBO Awards Record; Bashy and Ayra Starr Among Top Honorees
EastEnders: Four Decades of Challenging Social Norms
Jonathan Bailey Channels 'Succession' in Bold Richard II Performance
Northern Ireland's First Astronaut Engages in Rigorous Spacewalk Training
Former Postman Sentenced for Series of Sexual Offences in Northumberland
Record Surge in Anti-Muslim Hate Crimes Across the UK in 2024
Omagh Bombing Inquiry Concludes Commemorative Hearings with Survivor Testimonies
UK Government Introduces 'Ronan's Law' to Combat Online Knife Sales to Minors
Metal Detectorists Unearth 15th-Century Coin Hoard in Scottish Borders
Woman Charged in 1978 Death of Five-Year-Old Girl in South London
Expanding Sinkhole in Godstone, Surrey, Forces Evacuations and Road Closures
Bangor University Announces Plans to Cut 200 Jobs Amid £15 Million Savings Target
British Journalist Charlotte Peet Reported Missing in Brazil
UK Inflation Rises to 3% in January Amid Higher Food Prices and School Fees
Starmer Defends Zelensky Amidst Trump's 'Dictator' Allegation
Zelensky Calls on World Leaders to Back Peace Efforts in Light of Strains with Trump
×