Are “fiduciary managers” worthy of our trust?

“Not on our balance sheet”

Over the past week , there has been an underwhelming narrative put out by parts of the pension industry that the threat to UK DB pension schemes from the sharp rise in gilt rates was and is scaremongering. Examples have been quoted in previous blogs.

In tandem to this, one manager – BlackRock – actually wrote to certain of its clients telling them that it would unilaterally be taking away the “hedge” of inflation protection, without giving the clients the option to put up collateral to keep it.

Russell, who advertise themselves as a “fiduciary manager” and Blackrock, Insight. Schroders and LGIM who simply provide a mechanism for LDI seem to have done very little in this crisis other than protect their own positions and ensure that the pain is born by schemes rather than themselves.

It’s at time like this that you know who your friends are.

The ministry of disinformation

Each evening last week, my partner – who is CEO of a large pension scheme that is keeping its hedges in place, came home incensed by stories she had read in the press, comments made by senior figures in pensions, stating some version of “crisis what crisis”. It is easy when you are not involved in having to raise the lines of credit from your sponsor (or the sponsor’s bank) , not having to arrange the sale of growth assets , not – in the last court – having to sell your gilts. It is a lot harder to go cap in hand to a sponsor who is being told that the scheme is solvent and explain that a solvent scheme can run out of money.

It is heart-breaking to sell carefully created growth strategies down to pay the calls of banks you know nothing of, who are demanding money because of the ill-conceived , ideologically motivated, behaviour of politicians who did not even get their marking checked by the OBR.

To be then told that there is no crisis, that the brave email from Kierron Rosenberg that alerted the Bank of England to what was really going on, is “scaremongering” is enough to tax the patience of a saint (my partner is a saint but that’s besides the point).

Where is the Regulator?

I will leave a proper evisceration of the Pension Regulator’s role in this crisis to others, read my blog tomorrow. I will say at this point that the Pension Regulator has been accomplice and promoter to the take up of LDI and is now to be held to account for the peril it has put its charges, the DB schemes and ultimately the members, whose funding it is supposed to protect.

Not only that, but in a craven display of capitulation to the fiduciary and LDI managers and the banks behind them, it seems now to be considering a permanent use of the BOE as a long-stop in case future incidents such as we saw with the mini-budget, put the pension system in peril. It is an abhorrent alliance being contemplated that makes a mockery of market forces and creates an opportunity for banks to be the keepers of our pension system. I do not want my financial security being put in the hands of the global banking system with the Bank of England becoming my insurer of last resort.

It is time that the Pensions Regulator admitted that its regulation of LDI has been inadequate.


If you want evidence of the carnage that has been wrought upon our occupational pension schemes (both DB – and in terms of those in pre-retirement funds, DC) then it is in a brilliant article by Jo Cumbo and her team in the FT.

If you want evidence of the misinformation put out by the fiduciary and LDI managers, read Professional Pensions.

If you want evidence of the supine behavior of the Pensions Regulator – get yourself a subscription – and read this article in the FT.

If you want evidence that pension schemes do not need to be run by the banks, look at those who have stood out against LDI, scheme like Railpen and most of the LGPS. Look at master trusts who do not treat gilts as “risk-free assets” trusts like the Nations Pension.

Ask yourself , how it is that we found ourselves in a position where our “solvent” pension system nearly went bust and wonder what kind of Government and governance we have in place.

Denying we have a deep and systemic problem with the way we deal with risk, is no way to go forward. Questions should be asked – and answered by those who currently deny there is a problem. “Fiduciary” pertains to trust, we need it restored, it cannot be restored by papering over the structural cracks in our pension system.

About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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