Recommendation 13

In addition to putting in place mechanisms to provide real-time warning of reductions in LDI resilience, the Department for Work and Pensions and The Pensions Regulator should consult on whether introducing disclosure requirements on pension schemes relating the use of LDI through the annual report or investment statement, would help improve standards of governance. They should consult with stakeholders on the data it is appropriate to collect. We suggest that consideration is given to: the maximum leverage allowed in the LDI funds in which the scheme is invested; the type of LDI they invest in; compliance with minimum resilience levels; and data on the pension schemes’ asset allocations, by growth and matching assets. If they conclude that requiring pensions schemes to report regularly on their use of LDI would place an undue burden on some schemes, TPR and DWP should explain the basis for allowing such schemes to continue to use leveraged LDI.