Trustees are now faced with two particularly difficult choices, as our Dutch colleagues say “De keuze tussen twee kwaden”, which loosely translates to having to choose between two evils. In order to keep targeting the same return post-LDI crisis, schemes will either need to:

• Accept a lower liability hedge, leading to higher investment risk; or 
• Allocate more to LDI to retain their previous level of hedging, but lose portfolio diversification, in turn leading to higher investment risk.

Higher risk, for no additional return, is an inherently unappealing choice. Such a market shift should lead to trustees reconsidering their investment approach.

This choice extends beyond a simple overall portfolio consideration and should delve into other questions including how much complexity is enough, and do alternatives still have a place in portfolios?

Insurance LinkedIn Strategies can be used to generate returns that are lowly correlated with traditional asset classes, and help diversify a pension fund’s portfolio whilst reducing overall risk. Whilst they carry their own risks not found through other types of investments and can be complex, ILS can also provider society with social resilience, including from meteorological and climate events. In this session, Leadenhall Capital Partners LLP will:

• Describe the drivers of Insurance Linked Strategies
• Uncover the potential for pension funds to enhance expected returns whilst diversifying risk
• Outline how ILS provides societies with social resilience
  

The new forward-looking DB funding code, and anticipated new Covenant Guidance coming later this year, mean many will need to adapt the way they consider covenant.

An employer’s free cash flows and the period of ‘reliability’ will be key to establishing the scheme risks the covenant can underwrite, bringing an increased focus on an employer’s medium to long-term outlook and the many factors that can impact this, including ESG.

In this session, LCP will cover:

• How the new DB funding code will change how covenant assessments are approached; and
• How ESG / climate related factors should integrate into covenant assessments.

2022 was a year of change for LDI, wherein many historic assumptions about financial markets were challenged. Yields increased throughout the year, with the market turmoil of September / October 2022 being the period of highest volatility seen across sovereign bond markets in the post war period. This was inevitably followed by the call for higher resilience in LDI portfolios, and increased regulatory attention.

What does this mean for LDI? What could an LDI portfolio look like in 2023 and beyond? What questions should trustees ask their LDI manager?

Brightwell has made investments in people, processes and technology to transform its member administration. By doing so, they increased their member satisfaction exponentially with a number of bold decisions including, insourcing the administration, repatriating the call centre and introducing a new member portal and website. With over 100,000 members registered for online pension management, join this session to hear from Andy Whitelaw, Head of Admin Strategy, to learn exactly how they did it. 

The last few years has seen the emergence alternative risk transfer solutions all seeking to support DB schemes on their journey to end game.

This session will address:

• An in-depth explanation on how capital backed journey plans work
• How capital backed journey plans benefit the trustee, members, and sponsor
• An insight into Punter Southall’s capital backed journey plan, the Pension Safeguard Solution, and how it’s flexibility and robust structure opens the bulk annuity market to a wide range of schemes