UK Pension Funds Face Limited Cash Calls After Gilt Selloff
UK pension funds report limited cash calls after a selloff in government bonds. Advisers note that recent reforms have improved market resilience since 2022.
A sharp selloff in the government bond market of the United Kingdom has prompted limited cash calls for some pension funds, according to industry advisers. While the surge in yields has tested hedging positions, the impact remains significantly more contained than the 2022 crisis that followed the mini-budget of former Prime Minister Liz Truss. The recent rise in borrowing costs has been fueled by inflation concerns stemming from the conflict in Iran. These market movements have put pressure on Liability-Driven Investment (LDI) strategies, which are used by defined-benefit pension schemes to match assets with long-term liabilities.
