MPs are to investigate the regulations and governance of defined benefit pension schemes with liability driven investments (LDI).
The Commons Work and Pensions Committee has launched an inquiry into the impact of the recent volatility in gilt yields and subsequent intervention by the Bank of England.
It will also probe the role of the Pensions Regulator in regulating the use of LDIs and whether schemes had adequate governance arrangements – in particular, whether trustees understood the risks involved.
“Our inquiry will examine whether there are sufficient safeguards in place to protect the value of pension funds,” said committee chair Sir Stephen Timms. “It will also look at the role of trustees and the regulator in ensuring proper governance arrangements and whether LDIs are still fit for purpose for use by defined benefit schemes.”
MPs are seeking views on how the rise in gilt yields in late September and early October affected defined benefit schemes. The impact on pension savers, whether in defined benefit schemes or with defined contribution pension arrangements, will also be placed in the spotlight.
The inquiry will further consider whether the recent volatility should lead to changes in policy and governance – particularly when it comes to defined benefit funding rules.
The deadline for submissions is Tuesday 15 November.