Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the underlying causes of concerns relating to liability driven investment funds in the pensions industry in 2022; and what lessons his Department has learned about the operation of these funds during this period.

The Pensions Regulator (TPR) regulates pension schemes, and the Financial Conduct Authority (FCA) regulates UK-based asset managers that manage LDI funds which are often used by pension schemes. The Government welcomes the recent work of the UK regulators to require that LDI funds hold higher levels of resilience, following volatility in gilt markets in 2022. This work has also been welcomed, as a first step, by the Bank of England’s independent Financial Policy Committee (FPC), which is responsible for identifying and addressing systemic risks to improve UK financial stability. The FPC’s December 2022 Financial Stability Report (FSR), and its assessment of the vulnerabilities associated with LDI funds, was an important milestone in the ongoing lessons learned process.