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UK roundup: PIC, University of London, PPF, DB deficits

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  • City of London

Pension Insurance Corporation (PIC) has invested £114m (€143m) into university student accommodation in Central London.

PIC, which specialises in insuring the liabilities for defined benefit (DB) pension schemes, is the sole finance provider to help the University of London redevelop part of its student housing.

The facility, once complete, will provide 1,200 student rooms for the university that will be run and managed by the University Partnerships Programme (UPP).

The allocation to housing falls under PIC’s infrastructure portfolio, which includes other social housing investments.

PIC has insured close to £2bn of liabilities in 2014, requiring it to further develop its investment portfolio to match its longer-dated liabilities.

Investment manager at PIC, Delphone Deasy, said: “In the right investment structure, student accommodation is a good investment for PIC, providing long-dated, secure cash flows to help us match our pension liabilities.

“With £3.7bn of pension scheme liabilities insured by us last year and almost £2bn so far this year, we have a growing portfolio and appetite to invest in further opportunities of this nature.”

In other news, the Pension Protection Fund’s monthly update on the state of UK DB schemes has revealed the funding level has risen over the month of June.

Calculated on an s179 basis, which estimates a pension scheme’s ability to pay out PPF-level benefits, the current deficit of 6,150 schemes is £109bn, down from £118.2bn – although still £4bn higher than 12 months previous.

The aggregate amount of assets over the month of June fell by £3.5bn to £1.17trn, most likely driven by a 1.5% fall in the FTSE All Share.

However, liability levels fell by £12.7bn to £1.28trn after the yield on 15-year Gilts rose 8 basis points.

Liabilities over the 12 months have still risen significantly.

There are now 4,308 schemes in deficit and 1,842 schemes in surplus.

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