A gilt complex

Supply and Demand


Panic is probably too strong a word, but the UK pension industry is certainly experiencing a great deal of anxiety. With the yields on long-dated gilts slumping in January, pension funds were hit with a painful double whammy.

Since the adoption of FRS17, UK funds have had to calculate their liabilities using a discount rate based on bond yields. As a result, the drop in yields sent liabilities soaring, with some analysts estimating that around £30 billion was added to UK firms' deficits

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