DOOM: Pensions

[AtW]

“Hedge Fund Titan Warns UK Pension Crisis Is Just the Start

• Billionaire Marshall says pensions are acting like hedge funds
• Crispin Odey says the LDI crisis is only just beginning

For one of the world’s largest hedge funds, the UK pension fund crisis is just starting as central banks around the world raise interest rates and turn off quantitative easing.

Paul Marshall, co-founder of $62 billion investment firm Marshall Wace, said central banks had created the perfect environment for “mal-investment’ by artificially holding interest rates low for years

“The UK LDI industry is the first casualty of the end of the ‘money for nothing’ era -- the first dead fish to float to the surface as rising central bank interest rates act like dynamite fishing in global asset markets,” Marshall said in a letter sent to clients this month.

So-called liability-driven investments are a form of financial engineering that involve derivatives and allow defined benefit pension schemes to jack up leverage and juice returns. The Bank of England was forced to step in to stabilize markets after rising gilt yields triggered margin calls at the funds that came too quickly for them to manage.”

https://www.bloomberg.com/news/artic...just-the-start

[Paddy]

Every so many years there has to be a pension fund crisis in order to cover up what has really happened to the money.

[_V_]

Pension advisers next year be like...

[_V_]

https://www.bbc.co.uk/news/uk-politics-63303880

Liz Truss is no longer promising to raising state pensions in line with surging inflation, as she asks ministers to look for spending cuts.

The PM said two weeks ago she was "committed" to the triple lock, so payments rise by whatever is higher: prices, average earnings or 2.5%.


Oh dear, effectively pensions are going down 10% pa.

[SueEllen]

https://www.theguardian.com/business...er-mini-budget
BT’s pension scheme has revealed the value of its assets plummeted by an estimated £11bn in recent weeks, after the meltdown in UK government bond markets following Kwasi Kwarteng’s mini-budget.

The disclosure in the annual report published by BT Pension Scheme (BTPS), one of the UK’s largest company retirement plans with almost 270,000 members, provides one of the first insights into the scale of the financial impact on funds.

Pension schemes with more than £1tn invested in them came under severe strain following a dramatic rise in interest rates on long-dated UK government bonds in the days after the disastrous mini-budget on 23 September.

[CoolCat]

https://www.theguardian.com/business...er-mini-budget
BT’s pension scheme has revealed the value of its assets plummeted by an estimated £11bn in recent weeks, after the meltdown in UK government bond markets following Kwasi Kwarteng’s mini-budget.

The disclosure in the annual report published by BT Pension Scheme (BTPS), one of the UK’s largest company retirement plans with almost 270,000 members, provides one of the first insights into the scale of the financial impact on funds.

Pension schemes with more than £1tn invested in them came under severe strain following a dramatic rise in interest rates on long-dated UK government bonds in the days after the disastrous mini-budget on 23 September.

The BT pension fund has a little know state guarantee, was in the small print as part of privatisation. One of many reasons new starters have not been allowed to join it for a very long time.