The Bank of England has been raising rates for more than a year and analysts are looking for signs of when it will ease its hard stance.
The Pensions Regulator has for the first time been drafted into high-level emergency talks led by the Treasury and Bank of England as they examine measures to calm financial markets in the wake of the meltdown which followed Kwasi Kwarteng's mini-budget.
The watchdog, which oversees the £1.5tn pension sector, is understood to have been summoned into
closed-door meetings of the Authorities' Response Framework (ARF), which are triggered when an "incident or threat" could cause major disruption to financial services in the UK.
Officials will now consider how to further respond to
the meltdown that followed the chancellor's speech and
forced the Bank of England to intervene with a £65bn bond-buying programme in order to avoid a pensions crisis.
The secretive ARF was established in response to the 2007/8 financial crisis. It is meant to be a forum for top Treasury officials and key City regulators - the Bank of England and Financial Conduct Authority - to address threats to financial stability.
It is understood this is the first time the Pensions Regulator - led by industry veteran Charles Counsell - has taken part, highlighting the scale of the crisis that led to the Bank of England's intervention.
Experts said that options likely to be considered by the forum include the creation of a "back-stop fund" - controlled by the Bank of England to cover larger-than-expected collateral calls. A ban on the use of risky financial products that have been blamed for magnifying last week's crisis is also being examined.
Those products - known as liability-driven investments or LDIs - have been widely used by mostly final-salary pension funds managing more than £1.5tn in savings to help hedge against swings in the value of some of their investments.
However,
a plunge in the pound and a collapse in UK bond prices triggered calls on fund managers to provide more collateral on those complex contracts, meaning they had to sell assets to come up with cash at short notice.
But those fire sales further depressed prices, causing more volatility in the value of their assets. That, in turn, triggered larger collateral calls, sparking a much-feared "doom-loop", and creating concern about a drain on pension fund assets.
Con Keating, chair of the bond commission of the European Federation of Financial Analysts Societies, told the Guardian that the most effective way to avoid a similar crisis would be to ban the use of LDI strategies altogether.
"There are many possible 'solutions', but the only one that will work involves ensuring that schemes cannot indulge in the practices that led us to this," he said. He added that authorities should give funds six months to a year to unwind their current LDI contracts.
Keating said the Pensions Regulator itself should also be questioned over why it allowed the use of these hedging contracts. "I can only hope that they can also recognise the central role that the Pensions Regulator had in promoting those arrangements within our pension schemes."
He said he was concerned that the regulator would advise against a ban on LDIs, in order to avoid tarnishing its reputation.
The Bank of England and the Treasury declined to comment. A spokesperson for the Pensions Regulator declined to comment on the meetings but said it was "monitoring the situation in the financial markets closely to assess the impact on defined benefit pension scheme funding".
Reader Comments
Which is now collapsing.
Trouble ahead. Big trouble ...
In fact, you are not investing in your pension, but in the system that keeps the economy going, which in turn "acquires" the pension money to cash out in real-time. This pension savings (usually) go to a special investment fond, that is supposed to "invest" it in such a way as to compensate for inflation.
But if the economy is collapsing, and the financial system collapsing as well, your pension money is useless.
In fact, in case of serious trouble, the the pension fonds are usually one of the first pots the financial spin doctors throw in the fire the "save the system".
In the end, currency is just a claim and replacement for goods and services. If the goods are gone and nobody willing to provide a service for the paper notes, the "money" is worthless. Like German 1.000.000.000.000 Reichsmark notes from 1923 ...
So we little guys do need a Hail Mary or too....
In difficult times, people often fell back to barter. And precious metals.
And it is of course of advantage if you know something which is useful in a less technological society + being able to do it.
Yours Truly and let me know if you need anything...
Ken
ps - the change will happen because sad to report it but tis true - calculus is flawed at the edges and then the pandoras box of uncertainty unrecognized comes out with vengeance, but hopefully justified retribution as well. Because vengeance by its lonesome solves nothing, but justified retribution is called upon and I call upon it.
I just received a lengthy email from a lawyer friend representing many doctor specialists in BC. These specialists are having their licenses suspended or revoked by the BC Health authorities over their refusals to be vaxxed. That is a career killer. We already have huge shortages of good doctors nurses and health care workers, or which the BC government fired over 4,000 and refuses to rehire them. All this while the rest of the world is winding down CV19 draconian measures, our Chief Health officer just renewed and extended these health orders....
what a shit show....I feel like moving to Russia !!
He responded with 2 lawsuits one for 13 million one for 22 million. Game on.....
A collective of doctors providing medical services in the interest of patients might have some value in the new world order blossoming now as I type this.
So a nice thought, but unless the system that pays them goes down ... not too much hope for that despite the great idea that it is BK !!
Ps. I got an email minutes ago from my Member of Parliament (MP) whom my lawyer friend also copied the MP on too, acknowledging my 4 emails asking them what they are going to do about all the evidence I sent, as well as the lawyer on CV19 mandates & evidence of severe injury/death from the jabs....
The assistant to the MP responded, perhaps because I sent an email saying if you do not respond to your constituents then you maybe be CRIMINALLY COMPLICIT.....the assistant asked for my address, to make sure they are responding to the 'proper' constituents. Or maybe they want to send the RCMP to my door !!
~ Scott aka Gator
Gonna be a winter of discontent and gators prefer warm waters, so I hope you got contingencies in place.
Moreover, I could give a flip about overpaid doctors and the whole medical establishment - bunch of effing killers they are.
" I could give a flip about overpaid doctors and the whole medical establishment - bunch of effing killers they are."
perhaps you missed the fact these are the doctors who spoke out LOUD in Canada, and are now paying the price. If good doctors did no speak out most woulld still be under the Illusion CV19 was real and the jabs are 'safe & effective !!
have a stiff scotch BK and chill.....