The derivatives-based investment strategy that tipped the UK’s pension sector into crisis started with good intentions: Help companies fulfil promises they made to employees to pay a steady income through retirement.

Behind the push into that strategy, say pension trustees and their advisers, was the Pensions Regulator, the UK’s powerful watchdog, charged with safeguarding the savings of millions of private-sector workers. The regulator steered private pension funds to adopt liability-driven investments, known as LDIs, linked to returns on UK government bonds, according to pension trustees and consultants.