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28 September 2022

USS statement on Gilt markets

Simon Pilcher, CEO of USS Investment Management, said: “From a funding perspective, interest rate rises are having a positive impact – but the volatility in the UK market clearly driven by recent government announcements makes it very difficult to establish a long-term view.

“We are one of the few remaining DB pension schemes in the UK still open to new members and future accrual. We are, in that sense, an ‘immature’ scheme and in a very different position to many others, who will have relatively higher levels of liability-matching assets such as Gilts.

“From an investment perspective, we have a large and experienced in-house team, which means we can be very responsive and react quickly. We were (and remain) very well collateralised. Notwithstanding, navigating current market conditions has been challenging, and has required much management action over recent days.

“What became clear on Monday was that we were in a very disorderly market, most particularly in index-linked Gilts – with levels of volatility we’ve not seen in at least 35 years.

“The Bank of England has now intervened to dramatic effect. This intervention was warranted and timely. We continue to monitor these markets very closely and will ensure we are resilient to further challenges. We will, as ever, continue to manage the scheme’s asset portfolio for the long term.”