Polemic Paine

Polemic Paine



Been out with a friend who is board member of a UK pension fund and advisor to many others. LDI was an allowable risk. So everyone took it as a way to leverage to make underfunded liabilities look funded. Pushed by the structure creators and backed by the big consultants

Everyone thought they'd be fine because of that classic reason 'it hasn't happened before'. As allowed and everyone was doing them, logical risk was shoved under carpet because quant risk was low. It was classic herding into leverage. But you can't dream up assets. Boom.

Heads should roll on this one. 12 years of regulators draconian clamping down on risk in all other sectors of banking and fund mamagdment and this happens in pretty clear sight. DB pensions are bot FCA. Pensions regulator. But it's suited everyone to hide the pension problem.

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