{"id":5040,"date":"2023-07-30T12:08:14","date_gmt":"2023-07-30T12:08:14","guid":{"rendered":"https:\/\/latestnews.top\/2023\/07\/30\/uks-biggest-pension-fund-loses-16bn-in-ldi-debacle\/"},"modified":"2023-07-30T12:08:14","modified_gmt":"2023-07-30T12:08:14","slug":"uks-biggest-pension-fund-loses-16bn-in-ldi-debacle","status":"publish","type":"post","link":"https:\/\/latestnews.top\/uks-biggest-pension-fund-loses-16bn-in-ldi-debacle\/","title":{"rendered":"UK&#8217;s biggest pension fund loses \u00a316bn in LDI debacle"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div id=\"js-article-text\" wp_automatic_readability=\"61.898079763663\">\n<h2>UK&#8217;s biggest pension fund loses \u00a316bn in LDI debacle<\/h2>\n<ul class=\"mol-bullets-with-font\">\n<li class=\"class\"><strong>Universities Superannuation Scheme handles pensions of higher education staff<\/strong><\/li>\n<li class=\"class\"><strong>It is one of the few final salary schemes that is still open to new joiners<\/strong><\/li>\n<li class=\"class\"><strong>It invested heavily in controversial liability-driven investments despite warnings<\/strong><\/li>\n<\/ul>\n<p class=\"author-section byline-plain\">By <a target=\"_blank\" href=\"https:\/\/www.dailymail.co.uk\/home\/search.html?s=&#038;authornamef=Patrick+Tooher\" class=\"author\" rel=\"noopener\">Patrick Tooher<\/a> <\/p>\n<p class=\"byline-section\"><span class=\"article-timestamp article-timestamp-updated\"> <span class=\"article-timestamp-label\">Updated:<\/span> <time datetime=\"2023-07-30T11:56:30+0100\"> 06:56 EDT, 30 July 2023 <\/time> <\/span> <\/p>\n<p> <!-- ad: https:\/\/mads.dailymail.co.uk\/v8\/us\/money\/moneymarkets\/article\/other\/para_top.html --> <!-- CWV --><!--[if !IE]><!--> <link href=\"https:\/\/scripts.dailymail.co.uk\/static\/mol-fe\/static\/mol-fe-async-bundle\/7.1.4\/articleDefer.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/> <!--<![endif]--> <!--[if IE]>\n<link href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/1.17.0\/registration--.css\" media=\"screen\" rel=\"stylesheet\" type=\"text\/css\" \/>\n<![endif]--> <!--[if !IE]><!--> <link href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/17.18.0\/registration--.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/> <!--<![endif]--><!--[if IE]>\n<link href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/1.17.0\/all-ie8-9--.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/>\n<link href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/1.17.0\/all1-ie8-9--.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/>\n<![endif]--> <!--[if !IE]><!--> <link href=\"https:\/\/scripts.dailymail.co.uk\/static\/mol-fe\/static\/mol-fe-sync-bundle\/9.3.1\/desktop.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/> <link href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/17.18.1\/all--.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/><link href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/17.18.1\/all1--.css\" media=\"all\" rel=\"stylesheet\" type=\"text\/css\" \/> <!--<![endif]--><!--[if gte IE 8]><!--> <link rel=\"stylesheet\" type=\"text\/css\" media=\"screen\" href=\"https:\/\/scripts.dailymail.co.uk\/static\/mol-fe\/static\/mol-fe-fff\/2.4.1\/styles\/fff.css\" \/> <!--<![endif]-->  <!--[if IE 8]>\n\n<![endif]--> <!--[if IE 9]>\n\n<![endif]--> <!--[if IE]>\n\n<![endif]--> <!--[if !IE]> -->  <!--<![endif]--><\/p>\n<p>   <!-- SiteCatalyst code version: H.20.3.\n    Copyright 1997-2009 Omniture, Inc. More info available at\n    http:\/\/www.omniture.com -->  <\/p>\n<p>         <!-- End SiteCatalyst code version: H.20.3. -->  <!--[if IE]>\n\n<![endif]--> <!--[if !IE]> -->   <!--<![endif]--><!--[if IE]>\n  \n  <noscript><link rel=\"stylesheet\" href=\"https:\/\/scripts.dailymail.co.uk\/static\/gunther\/gunther-2159\/video_bundle--.css\"><\/noscript>\n  \n<![endif]--> <!--[if !IE]> --> <link rel=\"preload\" href=\"https:\/\/scripts.dailymail.co.uk\/static\/videoplayer\/7.1.1\/styles\/mol-fe-videoplayer.min.css\" as=\"style\" onload=\"this.rel=\" stylesheet=\"\" \/> <noscript><link rel=\"stylesheet\" href=\"https:\/\/scripts.dailymail.co.uk\/static\/videoplayer\/7.1.1\/styles\/mol-fe-videoplayer.min.css\" \/><\/noscript>  <!-- <![endif]-->   <!-- CWV --><\/p>\n<div itemprop=\"articleBody\" wp_automatic_readability=\"34.110711430855\">\n<p class=\"mol-para-with-font\">Britain&#8217;s biggest private sector pension fund has lost \u00a316 billion after an &#8216;unnecessary&#8217; debt-driven investment strategy unravelled.<\/p>\n<p class=\"mol-para-with-font\">The Universities Superannuation Scheme looks after the nest eggs of 528,000 past and present higher education staff.\u00a0<\/p>\n<p class=\"mol-para-with-font\">It is one of the few defined benefit schemes still open to new joiners that offers a pension based on a member&#8217;s final salary.<\/p>\n<p class=\"mol-para-with-font\">USS invested heavily in controversial liability-driven investments (LDIs) \u2013 despite warnings from sponsoring employers at Oxford, Cambridge and Imperial College London.\u00a0<\/p>\n<div class=\"artSplitter mol-img-group\" style=\"style\" wp_automatic_readability=\"8\">\n<div class=\"mol-img\">\n<div class=\"image-wrap\"> <img fetchpriority=\"high\" decoding=\"async\" id=\"i-bd3924331ef4b28e\" src=\"https:\/\/i.dailymail.co.uk\/1s\/2023\/07\/29\/21\/73752963-12352085-On_the_edge_USS_invested_heavily_in_controversial_liability_driv-a-1_1690663819631.jpg\" height=\"495\" width=\"634\" alt=\"On the edge:\u00a0USS invested heavily in controversial liability-driven investments \u2013 despite warnings\" class=\"blkBorder img-share\" style=\"max-width:100%\" \/> <\/div>\n<p> <noscript> <img decoding=\"async\" id=\"i-bd3924331ef4b28e\" src=\"https:\/\/i.dailymail.co.uk\/1s\/2023\/07\/29\/21\/73752963-12352085-On_the_edge_USS_invested_heavily_in_controversial_liability_driv-a-1_1690663819631.jpg\" height=\"495\" width=\"634\" alt=\"On the edge:\u00a0USS invested heavily in controversial liability-driven investments \u2013 despite warnings\" class=\"blkBorder img-share\" \/> <\/noscript> <\/div>\n<p class=\"imageCaption\">On the edge:\u00a0USS invested heavily in controversial liability-driven investments \u2013 despite warnings<\/p>\n<\/div>\n<p class=\"mol-para-with-font\">LDIs are meant to help ensure schemes can fulfil their promise to pay future pensions. But they came unstuck after last year&#8217;s <a target=\"_blank\" style=\"font-weight: bold;\" class=\"class\" href=\"https:\/\/www.dailymail.co.uk\/money\/markets\/article-11349813\/MPs-probe-pension-crisis-mini-Budget.html\" rel=\"noopener\">mini-Budget sent the pensions market into meltdown<\/a>.<\/p>\n<p class=\"mol-para-with-font\">The rout, which revealed huge borrowing hidden in the pensions system, was only halted by a \u00a319 billion Bank of England bailout.<\/p>\n<p class=\"mol-para-with-font\">USS, led by former pensions regulator Bill Galvin, insisted it was not a big user of leveraged LDIs. But accounts just published show the scheme&#8217;s assets plunged from \u00a389 billion to \u00a373 billion last year.<\/p>\n<p class=\"mol-para-with-font\">&#8216;These accounts show a terrible picture of unnecessary losses,&#8217; said pensions expert Henry Tapper.<\/p>\n<p class=\"mol-para-with-font\">Galvin, who is due to retire this year, was an architect of LDI strategies as industry regulator. He was paid \u00a3790,000 in his last year at USS, including a \u00a3262,000 bonus.<\/p>\n<p class=\"mol-para-with-font\">Despite the fact that its investments include a 20 per cent stake in <a target=\"_blank\" style=\"font-weight: bold;\" class=\"class\" href=\"https:\/\/www.dailymail.co.uk\/money\/markets\/article-12311853\/Thames-Water-suffers-1-4bn-drop-value-largest-investor-slashes-value-stake.html\" rel=\"noopener\">troubled Thames Water<\/a>, the scheme&#8217;s overall funding position improved due to higher gilt \u2013 or Government bond \u2013 yields reducing its liabilities.<\/p>\n<\/div>\n<p>            <!-- ad: https:\/\/mads.dailymail.co.uk\/v8\/us\/money\/moneymarkets\/article\/other\/inread_player.html --><\/p>\n<div class=\"column-content cleared\">\n<div class=\"shareArticles\">\n<h3 class=\"social-links-title\">Share or comment on this article:<br \/>\n                        <\/h3>\n<\/p><\/div><\/div>\n<p class=\"mol-style-italic byline-section justify\">Some links in this article may be affiliate links. 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