The pensions watchdog has scrutinised every defined benefit scheme in the country over their exposure to the controversial investment strategy that blew up two years ago, as part of efforts to avoid a repeat of the fiasco.All 5,000 private sector defined benefit schemes and hybrid schemes in the UK were asked 23 questions about their use of leveraged liability driven investment funds (LDI) in a compulsory annual survey of the industry conducted by the Pensions Regulator this year. The exercise, which has not previously been reported, is one of a series of initiatives by watchdogs to step up their oversight of this area, which caused chaos in markets after chancellor Kwasi Kwarteng’s ill-fated mini-budget under Liz Truss’s government two years ago.

The budget fuelled a rout in government bonds, which in turn caused a jump in cash calls by LDI funds used by pension schemes and led to a spiral of gilt selling. The government bond market was only stabilised when the Bank of England stepped in and spent £19.3 billion on emergency gilt purchases.

That fiasco has led to a crackdown on LDI funds led by the Bank’s Prudential Regulation Authority and has heightened concerns about the opaque shadow banking sector, which covers a swathe of non-bank financial institutions.

Defined benefit schemes routinely use LDI to manage risks but the sharp movement in gilts after the mini-budget caused margin calls on their leveraged LDI strategies that many retirement funds struggled to meet, stoking what the Bank called a market “doom loop”.

Every occupational defined benefit scheme and hybrid fund, which are schemes that include DB elements, are required to submit a so-called scheme return to the Pensions Regulator annually. This return gathers information about the industry and was overhauled this year to include a section on leveraged LDIs.

If schemes used leveraged LDI, they were asked to disclose the asset manager providing the fund, whether it was pooled or segregated and the net asset value of the mandate. They were also asked a series of questions about their ability to meet margin calls. Submissions were due at the end of March.

John Ralfe, an independent pensions consultant, said the data-gathering by the watchdog was welcome but added: “You can have as much information as you want but what are you going to do with it?”

In March last year, the Prudential Regulation Authority urged the Pensions Regulator to toughen its oversight by ensuring that LDI funds had enough liquidity to withstand a jump in gilt yields of at least 2.5 percentage points. This prompted closer scrutiny of the industry by the pensions watchdog, which has been welcomed by the Bank.

Neil Bull, the pension regulator’s executive director of market oversight, told The Times: “We recognise the important role that pensions play in the wider financial ecosystem. That is why we continue to monitor the potential risks presented by LDI and, as recognised by the Bank of England, have put in place measures which mean that any future stress event can be managed.”