Fears over the health of the pensions industry persisted as one liability driven investment (LDI) fund teetered on the brink of collapse yesterday.
Alarm bells were raised as financial regulators identified one fund at an asset manager that would have faced potential disaster had gilt yields risen.
A half percentage point rise in the interest rates on government bonds would have left this unnamed fund having to conduct a ‘fire sale’ of these gilts, according to Sky News.
The Bank of England was last month forced to shore up the pensions system through an emergency bond buying programme. Gilt yields fell yesterday as investors welcomed Chancellor Jeremy Hunt’s decision to reverse many of the tax cuts announced by predecessor Kwasi Kwarteng. Ex-pensions minister Steve Webb said: ‘The Bank bought us some time.’
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