M&G Introduces an insurer-supported run-on strategy for defined benefit pension plans, after winning a £400 million commitment from an unidentified UK scheme for its Cashflow Driven Investing+ (CDI+) program.
This approach merges M&G Investments’ skills in asset management with M&G Life’s insurance strengths to enable well-funded DB plans to create extra value while keeping options open for their endgame plans.
CDI+ lowers the assets schemes must set aside for liquidity and collateral needs, letting a larger share of their portfolios stay in higher-return assets for longer.
M&G indicates the solution will permit trustees to seek greater returns while ensuring pension payments can still be made, even during unstable market conditions.
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The product blends M&G Investments’ expertise in handling assets for future pension liabilities and protecting against inflation and rate changes with M&G Life’s insured liquidity backing.
M&G mentions this strategy could offer an option for schemes that aim to build more value from their assets before moving to buyout.
Gurbani Swanni-Leach, head of pension solutions at M&G Investments, stated: ‘CDI+ merges the top qualities of M&G’s investment and insurance services to form a new run-on solution backed by an insurer for DB pension schemes.’
Kerrigan Procter, managing director of corporate solutions at M&G Life, added: ‘By uniting M&G’s history and success in fixed income with M&G Life’s insurance capabilities, they have developed a solution that assists schemes in balancing growth, security and flexibility.’
