Source · Select Committees · Work and Pensions Committee
Seventh Report - Defined benefit pensions with Liability Driven Investments
Work and Pensions Committee
HC 826
Published 23 June 2023
Recommendations
13
Deferred
Para 127
Consult on introducing LDI disclosure requirements for pension schemes to improve governance.
Recommendation
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 …
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Government Response Summary
The government states existing law requires statements of investment principles and TPR is already collecting data; DWP will consider whether changes to disclosure requirements are appropriate in light of TPR’s findings, deferring a direct commitment to consult on new requirements.
Department for Work and Pensions
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Conclusions (2)
3
Conclusion
Deferred
The European Directive on the Institute for Occupational Retirement Provision (IORP) contained restrictions on borrowing. In 2005, the UK Government took the decision to transpose it into law in a way that allowed existing investment practices, including the use of derivatives and gilt repo, to continue. Supporters of leveraged LDI …
Government Response Summary
The government highlights past actions like publishing guidance and calls for evidence. It states TPR has no direct means to restrict LDI use as it's a trustee decision, though TPR will monitor adherence to guidance and take action on governance failures.
9
Conclusion
Deferred
Para 99
TPR told us that scheme consolidation would help improve scheme governance, by reducing the number of small schemes. However, consolidation needs to be into a safe vehicle, which requires legislation. DWP consulted on DB consolidation in 2018 but has still not responded to this. Another long-standing question has been whether …
Government Response Summary
The government accepts the FPC's recommendation for TPR to incorporate financial stability considerations and details TPR's ongoing work, including setting up protocols with the BoE, reviewing its approach to external risks, and researching non-LDI trends. It does not address the specific deadlines or actions requested in the recommendation.