M&G has been appointed to a £400m (€478m) mandate from an unnamed UK defined benefit (DB) pension scheme for a run-on cashflow-driven investing + (CDI+) solution.
The mandate is first for this solution and reflects a growing interest in run-on strategies, the firm announced.
The solution is designed for well-funded DB pension funds seeking to generate additional value by reducing the amount of assets that need to be held to meet liquidity and collateral requirements, while retaining flexibility over endgame planning.
It combines M&G Investments’ expertise and track record in managing assets to meet future pension payments and protect against inflation and interest rate risk with insurance capabilities provided by M&G Life.
By supporting schemes’ liquidity needs through M&G Life’s insurance capabilities, CDI+ allows assets to remain invested in higher return-seeking allocations for longer – including in private markets – while giving trustees greater confidence that pension payments can continue to be met, even during periods of market volatility, it added.
CDI+ enables M&G to support DB pension schemes across the full range of endgame strategies, from self-managed and delegated run-on arrangements through to bulk purchase annuities or other forms of consolidation.
Gurbani Swanni-Leach, head of pension solutions at M&G Investments, said: “CDI+ brings together the best of M&G’s investment and insurance capabilities to create a new insurer-backed run-on solution for defined benefit pension schemes – and potentially consolidators like superfunds and master trusts.
“As trustees look for ways to generate additional value from their assets while retaining flexibility over their long-term plans, CDI+ helps schemes keep more assets invested while giving trustees greater confidence they can continue meeting member payments, even during periods of market volatility.”
Kerrigan Procter, managing director of corporate solutions at M&G Life, added: “By combining M&G’s heritage and track record in fixed income investing with M&G Life’s insurance capabilities, we have created a solution that helps schemes balance growth, security and flexibility. CDI+ enables schemes to invest like an insurer, with an insurer.”
