Long-Run Global Implications of the UK's LDI Crisis

This piece looks at the recent crisis in the UK pension industry stemming from the “mini” budget and its impact on UK bonds and policymaking has implications far beyond the UK.

The recent crisis in the UK pension industry stemming from the "mini" budget and its impact on UK bonds and policymaking has far-reaching implications for investors and globally.

In their new blog, authors Inigo Fraser Jenkins and David Hutchins review the long-run impact across several key aspects of pension provision: asset allocation within defined benefit (DB) and defined contribution (DC) pension plans; the levels of risk in pension portfolios; and the rate of annuitization via insurance companies.

They also address wider macro policy issues including the amount of systemic risk that DB pension funds carry, the direction of real interest rates, and the level of demand for long-dated UK government debt.

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