Pensions - Articles - Some pension schemes see deficits reduce since Brexit vote

 In particular, pension schemes that protected themselves against falls in Gilt yields by investing in leveraged Liability Driven Investment (LDI) are likely to have fared better than most because the value of the scheme’s assets will have increased in line with liability values. Indeed, some pension schemes have even seen their funding levels improve as a result of the Brexit vote, providing some welcome news to pension schemes and sponsors.

 Ben Gold, Head of Xafinity’s Investment Team in Leeds commented: “LDI will have provided pension schemes with some protection against the falls in Gilt yields that we have seen since the Brexit vote. Indeed, because LDI assets have performed so well, many pension schemes with LDI will imminently be receiving cash payments from their LDI managers.

 Receiving these cash payments provides pension schemes with opportunities to further refine their investment strategies, particularly if their outlook or risk appetite has changed. We are seeing pension schemes use this money for a range of different purposes depending on factors such as their employer covenant and net cashflow position – there is no “one size fits all” answer.”