LDI crisis is a 'stark reminder' on governance, diversification and risk management

Charles Marandu says trustees should consider their approach in these areas going forward

clock • 3 min read
A well thought out approach to liquidity and solvency risk management was key during the LDI crisis
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A well thought out approach to liquidity and solvency risk management was key during the LDI crisis

The liability-driven investment (LDI) crisis, which followed the September 2022 mini budget, has given the pensions industry a huge scare. At its heart, the crisis was the result of a rise in gilt yields of unprecedented scale and swiftness.

The underlying issue was that too many pension schemes in our industry were exposed to a high degree of leverage within LDI funds or strategies, possibly coupled with insufficient liquidity in asse...

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