Pension Funds
The question
To ask the Secretary of State for Work and Pensions, what guidance has his Department issued to pensions schemes on contacting members whose pre-retirement fund suffered crystallised losses following the use of leveraged Liability–Driven investment strategies during the gilt market disruption of September 2022.
Answered by Department for Work and Pensions
Defined benefit (DB) pension schemes provide a predetermined level of pension and/or other benefits. Employers are responsible for funding the pensions and other benefits promised by their DB schemes and, although contributions are paid into the scheme and the scheme funds are invested, the level of pension and other benefits due does not depend on the performance of those investments.
The Department did not issue any guidance to pension schemes in relation to gilt market movements in September 2022. Guidance is regularly issued by the Pensions Regulator on topics, including detailed guidance on Liability-Driven Investment published on 24 April 2023.
Rising gilt yields have contributed to a funding surplus across much of the DB landscape, with the Pensions Regulator’s Annual Funding Statement indicating that around 90% of schemes are in surplus on a Technical Provisions basis.
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