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Rethink Pensions: Yield update

Rethink Pensions: Yield update

In our yield update we explore the background to the current rates environment, the drivers of recent movements and situate these in the context of their key relevance to UK pension schemes.

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2018 Yield update

Gilt yields have been interesting to follow in 2018, with economic optimism vying with ongoing geopolitical concerns to provide direction on where interest rates will go. This article discusses the implications for pension schemes, and their hedging portfolios, of this environment. In particular, we explore the effects of curve flattening on the performance of hedging portfolios against scheme liabilities, and the sometimes counter-intuitive movements we witnessed over Q1 2018.

Read the full 2018 yield update for more detail.

 

Previous updates

March update

Longer dated real yields took a round trip over Q1 2018, ending the quarter broadly in line with where they finished 2017. Investor sentiment started the year optimistically but moved to a more pessimistic stance by March, as geopolitical tensions and fears of an escalating US-China trade war mounted. This caused rates to fall back from the higher levels reached earlier in Q1. We examine some of the implications for pension schemes at 31 March 2018 in the following update.

Read the full yield update for more detail. 

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