90% of over 400 trustee and company representatives surveyed by LCP think that LDI (perhaps in a modified form) still has a role to play in pension scheme strategies, despite the recent challenges during gilt market volatility. The survey was undertaken at an LCP webinar.  

This appears to highlight the importance schemes continue to place on LDI strategies helping manage funding level volatility, and with that improved certainty over the level of cash support required from sponsoring businesses at a challenging economic time.   

In a second poll of the same group, over half also believed that the Bank of England will need to extend its support for the gilt market beyond the current deadline of 14 October.  

Steve Hodder, Partner at LCP, commented: “The last couple of weeks has seen much commentary on LDI strategies and how they are being used.  We know that headlines can be a bit sensational, and let’s face it LDI is a complex topic.  We’re therefore not surprised that there have been a range of interpretations of recent events. 

“But it is really interesting to see that our audience, generally well-informed on this issue, overwhelmingly continue to see the value that LDI can bring to successfully securing pension scheme benefits.   

Across the industry there is a clear acknowledgment that LDI strategies will need to be evolved for the environment we now find ourselves in.  But we continue to believe that LDI is an important risk management tool for both trustees and sponsors.”