A number of consultants have said Barclay's attempts to manipulate the LIBOR rate between 2005 and 2009 could affect UK pension funds "negatively", depending on their derivatives trades, but it is still too early to assess the full impact of the scandal.
Following Barclays recent admission that it deliberately attempted to fix the rates over a five-year period, many in the industry have speculated whether pension funds' returns were affected through commercial mortgages, swaps, short-term bonds and Barclays shares themselves.
Boris Mikhailov, principal within Mercer's financial strategy group, told IPE it remained unclear what impact attempts to manipulate the bank-lending rate had had on the published LIBOR rate itself. "We need to wait and see if the published LIBOR rate should have been lower or higher", he said. According to Mikhailov, the real impact for pension funds will depend on their asset mix and derivatives positions at the time when the misconduct took place.
The National Association of Pension Funds (NAPF) followed a similar line of reasoning, in addition to questioning the remuneration of Barclays' executives. The association also called on pension schemes to discuss the potential impact with asset managers managing holdings on their behalf. David Paterson, head of corporate governance, said: "The impact of LIBOR manipulation on pension funds is hard to pin down and could have happened through a range of financial instruments".
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