Bank of England Says Pension Funds Were Hours From Disaster Before It Intervened

• The Bank of England told lawmakers that several pension funds were hours from collapse when it decided to intervene in the U.K. long-dated bond market last week.
• The central bank’s Financial Policy Committee stepped in after a massive sell-off of U.K. government bonds — known as “gilts” — following the new government’s fiscal policy announcements on Sep. 23.
• The emergency measures included a two-week purchase program for long-dated bonds and the delay of the Bank’s planned gilt sales, part of its unwinding of pandemic-era stimulus.
• The plunge in bond values caused panic, particularly for Britain’s £1.5 trillion ($1.69 trillion) so-called liability-driven investment funds (LDIs). Long-dated gilts account for around two-thirds of LDI holdings.
• Many LDIs are owned by final salary pension schemes, workplace pension plans popular in the U.K. that provide a guaranteed annual income for life upon retirement, based on the worker’s final or average salary.

(Source: CNBC)