LDI justified despite credit fears say trustees


The international banking crisis in September and October raised the spectre of counterparty risk for UK pension trustees that adopted liability-driven investment (LDI). But trustees insist that LDI has proved itself by protecting schemes against interest rate and inflation risk changes which have increased liabilities during a time of tumbling equity valuations.

The pounds 800 million WH Smith pension scheme de-risked and entered into a LDI swap arrangement with Goldman Sachs in 2005. According