Gilts are fixed income securities issued by the government. They use them to raise money for government spending. They are seen as a very secure investment (the UK government is unlikely to go bust).

When interest rates rise the value of gilts inevitably fall. This is unavoidable.

Defined benefit (DB) pensions (aka final salary pensions) have been impacted. The issue is that DB pensions are required to offset their liabilities (paying pensions throughout their member’s life – and sometimes their spouse’s life too (if the member dies first) with gilts).

They are required to use gilts to match their pension liabilities. This is so that they have the perfect amount of assets to pay for their obligations over time. Ensuring member’s pension get paid throughout their lifetime.

In practice these schemes tend top use derivatives to top up their gilt holding to make sure they match their pension liabilities. When the price of gilts fell (when interest rates went up unexpectedly) they needed to fund this difference. The only option available to them would have been to sell gilts, reducing their gilt holding and dropping the the price of gilts further.
This is when the Bank of England (BoE) stepped in and started buying gilts. This stopped a downward spiral in the price of gilts and saved some DB pension providers from not having enough assets to match their liabilities.

The BoE has managed to stabilise the situation for the time being. We await the next financial announcement from the government and its impact on the financial markets.