The use of leverage in liability-driven investments should be reassessed, according to respondents to a Work and Pensions Committee inquiry.

On the go: The Financial Conduct Authority has urged managers of liability-driven investment funds to learn the lessons of the autumn liquidity crisis, claiming that liquidity buffers represent only part of the solution to future volatility.

The Pensions Regulator’s lead investment consultant, Fred Berry, has suggested that industry ‘groupthink’ may have played a part in creating the conditions for the liquidity crisis that engulfed defined benefit pension schemes in the autumn.

The Pensions Regulator has set out its expectation that liquidity buffers be maintained across pooled and leveraged liability-driven investment mandates, going beyond the demands of Irish and Luxembourgish regulators.

The Bank of England’s bond market intervention was determined by the lack of ability of liability-driven investment pooled funds to receive the liquidity needed from schemes to rebalance in a short period of time, Andrew Bailey has revealed.

The true impact of the liability-driven investment turmoil will only be known when schemes start publishing their annual accounts, especially for a group of pension funds that were not able to meet collateral calls and lost their hedges, the Pension Protection Fund’s head of LDI and credit has warned.

On the go: Inflation and monetary policy represent the key concern for three-quarters (74 per cent) of pension trustees and their sponsors over the next six months.

On the go: Defined contribution scheme trustees are being encouraged to shift their focus on illiquid investments from cost to value, in a series of guides published by the Productive Finance Working Group.

Around £500bn in pension scheme assets are “missing somewhere” as a result of the liability-driven investment crisis, the Work and Pensions Committee has been told, with experts also questioning the role of leverage in these funds and the need for more guidance from regulators.