Why Britain's pension funds are at the root of its financial crisis

Oct 17, 2022 · Why Britain's pension funds are at the root of its financial crisis ... a financial by-product that pension funds had been using extensively suddenly exposed their weaknesses, forcing them to seek ...

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How Meltdown In A $1 Trillion Market Brought The UK To The Brink …

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Oct 8, 2022 · The margin calls came in — and kept coming. The Pension Protection Fund said it faced a £1.6 billion call for cash. It was able to pay without dumping assets, but others were …

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Risks From Leverage: How Did A Small Corner Of The Pensions …

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Oct 17, 2024 · In these funds, which make up around 10-15% of the LDI market, a pot of assets is managed for a large number of pension fund clients who have limited liability in the face of …

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Gilt Crisis Was Major Factor In £500bn Hit To UK Pension Funds, MPs …

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Nov 23, 2022 · The gilt market rout that forced UK pension funds to rapidly sell assets in September contributed to driving down the value of retirement schemes by as much as …

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FAQs about Why Britain's pension funds are at the root of its financial crisis Coupon?

What happened to pension funds?

Pension funds became forced sellers of assets to meet these collateral calls. They dumped gilts, causing prices to fall further, and also slashed their holdings in the most liquid securities, such as corporate bonds and equities. ...

Can pension funds sell fast in a crisis?

But the episode illustrates how wild swings in the gilt markets have taught UK pension funds an important lesson: assets that cannot be quickly converted to cash may deliver higher returns, but in a crisis pension schemes need assets they can sell fast. ...

Is Britain's pensions industry posing a new challenge to the bond market?

REUTERS/Dado Ruvic/Illustration/File Photo Purchase Licensing Rights LONDON, Sept 22 (Reuters) - Britain's pensions industry, Europe's biggest, is posing a new challenge to the country's 2 trillion pound ($2.5 trillion) government bond market a year on from the "mini-budget" crisis that put the sector at the centre of financial stability fears. ...

Could a pension fund blow up?

“You could have a pension fund blow up and the financial system keeps working,” said Kelly from Yale University. “It was really about the gilt market.” Post-crisis regulations have pushed banks, insurers and pension funds to invest more in “safe assets” like government bonds — but those assets aren't immune to a sell-off. ...

Why did the Pension Protection Fund get a £1.6 billion call?

The margin calls came in — and kept coming. The Pension Protection Fund said it faced a £1.6 billion call for cash. It was able to pay without dumping assets, but others were caught off guard, and were forced into a fire sale of government bonds, corporate debt and stocks to raise money. ...

Why did the bank of England sell off a pension plan?

The sell-off only abated when the Bank of England intervened in the bond market. The regulator estimated that the combined value of assets for 5,100 company defined benefit plans fell by around £425bn over 2022, from £1.79tn to £1.36tn — equivalent to a 24 per cent drop. ...