A recent survey of professional pension trustees of UK defined-benefit pension schemes revealed that 82% of trustees believed that they had the knowledge and skills needed to handle the “liability-driven investment” (LDI) crisis. Moreover, 72% of trustees were confident using LDI as a tool to manage risk and 78% thought their scheme had the right governance in place to handle the LDI crisis.
This is laughable. In response to the greatest investment bubble of all time, which saw the yield on government bonds falling to levels that, according to research by Bank of America, were the lowest for 5,000 years, these trustees saw fit not only to load their funds up to the gunwales with
