In addressing Pension Playpen today, William McGrath, founder of C-Suite Pension Strategies suggested LDI problems should inspire scheme trustees and members to consider some awkward questions.
– What has been sold and at what losses in the last month to meet LDI collateral calls? How large were those calls?
– Is leveraged LDI legal?
– Who agreed the terms for the collateral calls: quantum, timing and waterfall asset sale plans?
– Buyins are assets of the scheme. What are they worth priced today? What were the interest rates and mortality assumptions embedded in deals in recent years?
– In what circumstances could members see their pension improve on a discretionary basis?
– Given enthusiastic ESG commitments how can sponsors take a more engaged role in their DB scheme and all stakeholders have an upside from doing so? Are trustees committed enough to the ESG agenda?
“The LDI forced selling fiasco shows up flaws in risk transfer journey plans. Put them on hold. The alternative is for sponsors and former and current employees to embrace their schemes and revive them on a modernised ESG basis to serve long term all stakeholders.”
William McGrath email@example.com
FD Carol Animations have been providing critique of pension funding for some time