MPs probe pension crisis after mini-Budget 


MPs launch a probe into UK pension crisis that struck after Kwasi Kwarteng’s disastrous mini-Budget

  • The Commons work and pensions committee is looking into ‘the lessons to be learned’ from the incident 
  • The focus of the inquiry is defined benefit pension schemes that employed liability-driven investment (LDI) funds, used by pension funds to make sure they can afford future payouts to members.

MPs have launched an inquiry into the crisis that hit Britain’s pension market after Kwasi Kwarteng’s disastrous mini-Budget last month. 

The Commons work and pensions committee is looking into ‘the lessons to be learned’ from the incident and has issued a call for evidence, which will run until November 15. 

The focus of the inquiry is defined benefit pension schemes that employed liability-driven investment (LDI) funds, used by pension funds to make sure they can afford future payouts to members. 

MPs have launched an inquiry into the crisis that hit Britain’s pension market after Kwasi Kwarteng’s disastrous mini-Budget last month

LDIs hold large amounts of gilts, or government debt, the costs of which soared after the miniBudget, meaning many pension funds were forced to put in more cash to cover their collateral, money that many did not have. 

The crisis forced the Bank of England to pump £65bn of emergency funds into the system to prevent its collapse. 

That scheme ended earlier this month after Bank governor Andrew Bailey refused to extend support measures despite pressure from parts of the market. 

The committee will investigate the impact of the turmoil on pension schemes and savers as well as whether the Pensions Regulator had taken the right approach to monitoring the use of LDI funds. 

It will also examine whether LDI funds are ‘fit for purpose’ in pension schemes. 

The near-collapse of pension funds and surge in gilt costs caused a rapid reversal of most of Kwarteng’s tax cuts in the mini-Budget before he was sacked as Chancellor and replaced by Jeremy Hunt 

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