After the mini-budget, MPs are considering the pension crisis

MPs have launched an inquiry into the crisis that hit the UK pensions market after Kwasi Kwarteng’s disastrous mini-budget last month.

The House of Commons Work and Pensions Committee is looking at the “lessons to be learnt” from the incident and has announced a request for evidence, which will run until November 15.

The focus of the investigation is defined benefit pension schemes that used liability-oriented investment (LDI) funds, which were used by pension funds to ensure they could afford future payments to members.

LDIs hold large amounts of gilts, or government debt, the cost of which has soared since the mini-budget, meaning many pension funds have been forced to put up more money to cover collateral, money that many did not have.

The crisis forced the Bank of England to inject 65 billion pounds of emergency funds into the system to prevent it from collapsing.

That scheme ended earlier this month after the bank’s governor, Andrew Bailey, refused to extend the support measures despite pressure from some parts of the market.

The committee will investigate the impact of the shock on pension schemes and savers, and whether the pensions regulator has taken the right approach to overseeing the use of LDI funds.

It will also examine whether LDI funds are suitable for pension schemes.

The near-collapse of pension funds and a spike in gilt spending led to the swift reversal of most of Quarteng’s tax cuts in the mini-budget, before he was sacked as chancellor and replaced by Jeremy Hunt