The latest news from M&G for you;
M&G announces a £400 million mandate from a UK Defined Benefit pension scheme for CDI+ – an innovative run-on solution that combines the strengths of its asset management and insurance businesses. The mandate is the first for this solution and reflects a growing interest in run-on strategies.
Cashflow Driven Investing + (CDI+) is designed for well-funded defined benefit pension schemes 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. The solution 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.
CDI+ enables M&G to support defined benefit 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. M&G’s £145bn fixed income business has invested on behalf of pension schemes and insurers for more than 30 years and is combining its track-record with M&G Life’s growing bulk purchase annuity business, which is targeting £3-4bn per annum by 2027 through BPA Plus, supported by the £138bn With Profits Fund. The launch of CDI+ comes as increasing numbers of well-funded pension schemes consider running on assets to generate additional value before buyout, alongside growing market of consolidators such as superfunds.
Gurbani Swanni-Leach, Head of Pension Solutions, 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. This is another example of how M&G’s integrated business model can support innovation in the evolving pensions market.”
Kerrigan Procter, Managing Director, Corporate Solutions, M&G Life, said: “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. Alongside our bulk annuity offering, CDI+ demonstrates how M&G can support schemes throughout their journey, from running on assets to securing member benefits through to buyout.”
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