Schemes 'under-hedging interest rate risk'

Natasha Browne asks if schemes need to take further interest rate measures

clock

The majority of closed or frozen defined benefit (DB) pension schemes are significantly under-hedging their long-term interest rate risk at between 30%-40% when the ratio should be at least 70%, according to Aon Hewitt.

Senior partner John Belgrove says: "When a pension scheme hedges out some of its fixed interest rate liabilities, it effectively locks in a certain future rate. Many pension schemes have been holdi...

To continue reading this article...

Join Professional Pensions

Become a Professional Pensions Lite Member today

  • Three complimentary articles per month covering the latest real-time news, analysis and opinion from the industry
  • Receive important and breaking news stories via our two daily news alerts
  • Hear from industry experts and other forward-thinking leaders

Join now

 

Already a Professional Pensions
member?

Login

More on Investment

Trump tariffs making schemes 'rethink' US holdings

Trump tariffs making schemes 'rethink' US holdings

Isio says European schemes focused on reducing allocations and ‘damage limitation’

Jasmine Urquhart
clock 02 May 2025 • 1 min read
LGPS Central launches stewardship service

LGPS Central launches stewardship service

Midlands LGPS pool says service designed to ease governance burden on partner funds

Martin Richmond
clock 02 May 2025 • 1 min read
How the way schemes are working with asset managers is changing

How the way schemes are working with asset managers is changing

As schemes grow in size and sophistication, collaboration is becoming key

Charlotte Moore
clock 01 May 2025 • 8 min read
Trustpilot