Liability Driven Investment: Creating Liabilities

Find out more on our website: https://bit.ly/3PAIikb In this webinar, Dr Con Keating will cover his paper, examining the legal position of common elements of liability driven investment (LDI) for DB pension schemes. It concludes that there are significant risks, that their actions will be deemed ‘ultra vires’, for trustees and LDI investment managers arising from the use of borrowing, the use of derivatives, and the purchase of conventional and index linked gilts as ‘hedge’ instruments. It appears that the Pensions Regulator has failed to enforce the law, in breach of their statutory duty. The returns to LDI strategies are directly related to the performance of gilts and have historically generated positive returns with the secular decline in yields. However, with rates now rising, the losses which follow are likely now to attract the attention of scheme members and their sponsors, and most importantly their lawyers, Messrs Sue, Grabbit and Runne. Speaker: In the seven years since retiring, Dr Con Keating has restricted his advisory activities to projects for friends, former colleagues, and old clients. He remains active in a number of pro bono roles, including chairing the Bond Commission of the European Federation of Financial Analysts Societies. For the past five years, with Professor Iain Clacher, he has been researching the design and operation of collective defined benefit pensions schemes. He has taught courses as a visitor, at undergraduate and post graduate levels, at universities in the UK, US, Asia and Europe, and continues to supervise two doctoral candidates. The subjects taught and researched have included international and development finance, financial economics, mathematical finance and actuarial science, risk management and pensions design and modelling.